Cattle farming is quite a popular activity area since meat, milk, wool, and other products are always in great demand. Beef production and dairy production are two important areas that generate income in animal husbandry (Phillips 15). This low-cost industry allows efficient production of meat products in regions with extensive land use, where the development of dairy cattle breeding is hindered due to limited capital investments, feed conditions, remoteness from dairy markets. The restoration and further increase in the number of cattle are focused on the development of farms, their consolidation, specialization, and the rational concentration of livestock, depending on specific natural, economic, and market conditions. In such farms, it is possible to use intensive milk effectively and meat production technologies, ranging from forage harvesting, reproduction, and rearing of young animals, their feeding and fattening, to implementation.
While beef production alone is estimated at fifty billion dollars a year, the annual profit of the livestock industry in the United States is more than one hundred billion dollars. These statistics make the livestock business traditionally a profitable enterprise for investment. Now there are farms in many localities, but the demand in the country for their products has not yet been satisfied. A farm from scratch is still a promising business idea on which you can make good money. But on one condition, the farming business will be well planned and competently organized. The farm will be located in Huntsville, Texas, and it is expected to be operational in autumn 2022.
The mission of the cattle farm is to become a leader in the field of an intelligent approach to the content of cattle; we work for the growth and prosperity of our farm. High-quality integration of new farming technologies and provision of eco food are our main goals. The entire plan aims to provide a presumable insight on what a cattle farm should look like. In addition, the financial, managerial, and marketing analyses are conducted.
We decided to make our farm a company with limited liability (LLC) because this ownership type has been the most popular for the last decade. It is easy to open, which is beneficial for small entrepreneurs. LLC can carry out the full list of activities permitted by law, and it is easy to re-register, sell, withdraw from the membership and make any changes. At the same time, an important indicator is a fact that the participants do not have personal property responsibility.
The new venture is a good idea because Texas is a state full of farming lands; however, there is still a great demand for high-quality products. We aim to produce natural meat, milk, and other products for our customers to be sure that the products do not consist of any genetically modified organisms. Our primary entrepreneur goal is to create a cattle farm that would provide high-quality products to individuals and stores. The next objective is to become recognizable in the farming community across the state first and eventually penetrate the market of other states. Furthermore, we strive to attract young specialists dealing with the most modern farming tools and technologies in order to improve the recognition of our customers. Finally, we aim to expand our team and attract investors to grow our productivity. The starting capital is $550,000, considering that the team is skilled enough with using the equipment to launch the process.
Benefits to the Community
The breeding of livestock, poultry, or crop production for the purpose of subsequent marketing of the received products has several undeniable advantages over wage labor in urban conditions. At the same time, they bring financial benefits and social, medical, and psychological benefits. One of the most important advantages is active physical activity in the fresh air, which contributes to improving working capacity, labor productivity, and overall body improvement. In addition, the farmer always has the opportunity to consume organic products grown with their own hands (“How to Start a Cattle Ranch Business”). Moreover, the quality of the products on the table largely depends on the main asset of a person – their health.
Working for oneself and the benefit of one’s family is the best incentive for the application of strength, talent, and skills. Farms are most often built on the principle of family enterprises, which ensures both employment of all family members and higher activity efficiency. Common goals and teamwork strengthen family ties in such a team create a positive psychological climate. Another significant benefit is that farms contribute to public health improvement. By producing non genetically modified foods, our farm would suggest organic products which can help improve one’s well-being.
Company and Industry
The food issue in our country remains one of the most important. Today, there is a decrease in the consumption of meat and dairy products in the diet of the country’s population, a significant part of citizens adheres to improper nutrition. In terms of nutrition in the world, the United States is well-developed; however, the increase in fast food consumption significantly affects the nation’s health. Considering the dairy market, it should be noted that the dairy industry of the U.S., in comparison with other branches of the food industry, is least dependent on imports (Phillips 33). Manufacturers have successfully mastered producing a wide range of products, and the consumers prefer domestic products.
We have chosen two business models for our farm: B2B (business-to-business) and B2C (business to customers). The former presumes trade relations between legal entities; the firm focuses on producing goods and services for another business and not for an ordinary buyer (Hartline et al. 20). A company (or a separate division) sells its goods and services to corporate clients – other companies. Thanks to these acquisitions, the clients of B2B companies are doing business in the B2C market. In the case of a cattle farm, products such as milk, meat, leather, and others are the primary product to sell to businesses or people who do the same to their clients and customer. For instance, we can provide a local market or store with our goods to sell them to the customers. The B2C model implies that an item or service is sold directly to the customer. Our farm will likely have its store so that the clients can come by and purchase what they want.
There are always competitors in the livestock industry, but everyone is required to provide the meat industry. My company will not be as big as others, but the cattle will be better. I will be able to devote all my attention to my little herd and make sure they are worth the time and money spent. The economic conditions in the cattle industry are currently unfavorable. All the necessary things a cattleman needs are here, such as fertilizers and feed. Cattle prices are also low now, so the industry is not doing well.
As a cattle breeding company, we strive to maximize our strengths and capabilities and work on our weaknesses and threats. SWOT analysis allows us to determine the reasons for the effective or inefficient operation of agriculture in the market; this is a brief analysis of marketing information. We can conclude in which direction the farm should develop its economic activities and ultimately determine the resources received by segments. The result of the analysis is the development of a marketing strategy.
- Many years of experience in agriculture.
- Availability of production facilities, land plots and agricultural land.
- Availability of machinery and equipment for the production of feed.
- Availability of a permanent customer base for the sale of products.
- Competitive products.
- State support of the industry.
- Competition in the sales market.
- High cost of concentrated feed.
- High cost of fuel for cars and transport.
- Dependence on climatic and epizootic factors.
- Expansion of production capacity.
- Expansion of the distribution network of finished products.
- Minimization of costs at all levels of production.
- Reduction of climatic and epizootic risk factors.
- Implementation of the project will contribute to the creation of new jobs.
- The possibility of further expansion of production.
- Actions on the market of competitors producing similar products.
- Increase in the cost of production due to rising prices for raw materials.
- The probability of livestock death due to climatic and epizootic factors.
- Fluctuations in product prices.
The primary area of specialization of our cattle farm is breeding herds of cows and producing milk and meat. It is a multi-structured, well-grounded, verified, and controlled set of activities aimed at breeding cattle and manufacturing organic products. Cattle farming as a business consists of two interrelated aspects: the technical side of production (technologies of agriculture, animal husbandry, tillage) and the functions and services that support the production process.
The role of the head of a farming enterprise differs from the role of the leader in a centralized economy. The scope of his responsibilities expands as he becomes responsible and accountable for such actions as setting tasks, planning the enterprise’s activities, implementation, control, and decision-making (Morin 5). Firm management (management of a firm as a commercial enterprise) can be defined as a type of activity that combines planning and management with agricultural production. The problem of planning is how to allocate the available resources in various fields of action in such a way as to best meet the needs of a person (or organization). Planning requires the manager to assess future events — making a forecast. However, in real life, the head of a farm works in constantly changing conditions in an environment of risk and uncertainty, rarely coinciding with the forecast.
Conceptual skills include the manager’s thinking, ability to process incoming information, and planning skills. Our managers understand the role of each individual on the farm. They also realize the essence of each emerging situation, identify its most important factors and anticipate further developments. Additionally, our managers are endowed with interpersonal skills that are understood as the ability of a person to work with people and with their direct participation and the ability to interact effectively as a team member. They motivate, promote and coordinate the staff’s activities, set examples, communicate, and resolve conflicts (Morin 77). The farm manager would have to effectively communicate with stakeholders to sell, buy, and attract investments.
Moreover, the manager’s technical skills presuppose the presence of professional knowledge, analytical abilities, and the ability to correctly apply instrumental and other means to solve problems in this particular area. In his sense, the farm’s personnel have to be experienced in using the equipment and computer program. Industry expertise and product expertise are a part of the communicative skills that our managers have. Understanding the client’s industry is vital because a successful seller should strive to be aware of how the industry in which their clients work lives: who are the main players in this area, the current trends, what problems and difficulties customers face, etc. Our managers also tend to coordinate the terms, ensuring the same understanding of the basic terms and expressions between them and their interlocutors.
Finally, it is indispensable that our managers have some farm-related experience. It means they should know how to breed animals in order to receive high-quality organic products in the end. In addition, they should like outdoor activities such as hunting, fishing, playing different sports, and others. This experience can help them better navigate their working progress and realize their own contribution to the business development
To operate as cattle farm, we will need a staff of at least twenty people. Two managers, a veterinarian, cattle slaughterers, field workers, marketing officer and an accountant are involved in the working process. Each of them works from six to seven six days a week with a one-month vacation a year. They receive salary twice a month; the sum differs in accordance with the number of hours they work.
The material resources are primarily the cattle: within the framework of this project, 30 heads of dairy cows, 20 bulls and 20 heads of calves will be purchased. A large amount of work on farms is carried out with the help of machines, so it is vital to purchase milking machines, a loader and a conveyor. Apart from the necessary equipment, we will need to buy feed and nutriment for the cattle depending on the breed.
Among the most significant informational resources our cattle will use is the customer-tracking system. Since we aim to provide high-quality products, it is indispensable to trace the clients’ level of satisfaction with our dairy and meat. We will resort to search-engines, different websites, articles that would help us to improve the quality of our goods and manufacturing technologies. Finally, we will launch the promotional campaign in order to become recognizable in the area.
The initial budget is $550,000 considering that all the personnel has enough experience to start working from scratch. A 100-acre land would cost about $300,000, while the cattle itself would presumably cost $70,000. $100,000 will be spent on the equipment, feeding, and farm housing; the rest will be left for paying out salary. Launching the farm’s website will cost $500, while launching promotion campaign will cost $1,000. The license and permit will cost approximately $2,000 and business incorporating fees – $750.
Manufacturing and Operations Plan
Initially, we plan to buy 100-acre land aiming to expand the territory further. The barns, manufacturing buildings, and corrals for cattle will be based on the land. The manufacturing space will be equipped with the necessary equipment, including machinery for butchering and milking. Inventory control will be held once a week for better operating flow. As for the use of advanced technologies, I would use embryo transfer technology to my advantage. I would personally choose the bulls and donors and make this a match that would help create a good foundation for my herd. A competitive reaction would be to increase the number of pastoralists who have turned to the embryo transfer industry and are able to create a first-class herd.
The workers of the cattle ranch should be responsible since they would all need to keep an eye on the cattle, their size, and productivity. It is indispensable that each person is fit and is able to perform a physical activity because the business would require much outdoor activity. In addition, the employees must have any experience in farming. Each team member is guaranteed to have timely payments and vacation. We will provide workers with farm-related training and re-qualifications.
The marketing strategy at this stage consists in long-term coordination of the possibilities of meat, milk and vegetables production with the market situation. The marketing strategy is based on five strategic concepts:
- The choice of target markets market segmentation, i.e. The allocation of competitive target markets within the aggregate.
- The choice of methods of entering them.
- The choice of methods and means of marketing.
- Determining the time to enter the market.
Tools for the implementation of marketing activities are:
- Improvement of the organizational structure.
- Product development and introduction to the market.
- Market research in order to generate demand and stimulate sales (Hartline et al. 145).
- Creating a service and improving the efficiency of the economy.
- Promotional events.
- Price management.
The major elements of the marketing mix are price, promotion, product, place, people, process, and environment. Our prices will be initially kept below average to attract customers, who are mainly middle-aged family people living in the area. The farm will be located in Huntsville, Texas; hence, the customers are expected to come from the same state. The ranch will be promoted on the Internet as well as by word of mouth. When it comes to the environment, a competitor’s main problem would be the quality of cattle that another person would have in the cattle industry. If a competitor has cattle of the best quality, then these cattle will be sold earlier than others and at the best price. Thus, it can force a competitor to step up and do a few things to improve their performance, knowing that the competition will be of good quality.
At the introduction stage, the sales are expected to be low because the cattle first need to be grown, especially speaking about the meat production. The next step is growth which will be aimed towards the farm expansion. By the time we start selling meat, the sales are likely to double. Additionally, we will raise the prices due to the increased demand. Several years after the launch, we are supposed to reach the maturity stage: our products will be on-demand, the prices will remain at the same level, while the number of customers will gradually grow. The farm will probably decline in case of economic crisis or the emergence of larger competitors in the field.
Business Promotion Mix
We will first resort to an advertising agency to promote our ranch. Instagram Facebook and Instagram, in particular, we are trying to attract regular customers by launching a promotional campaign on the Internet. The word of mouth strategy will also be used, because for us it will be an increasingly effective tool. In the area where the farm is located, people tell each other about the producers from whom they buy goods.
We assume that this cattle business will be financed by a bank loan, and the payback period is estimated at two years and three months. Since the profit is not fixed, the projected yield is $50,000 per capita after all deductions of expenses. The startup costs for the business are detailed in the Appendix section with several statements. Since I plan to apply for funding, I have included a Personal Balance Sheet (see Figure A) and a Business Balance Sheet to show the financial position (see Figure B). Attached is a copy of my Business Income Statement to illustrate a summary of the revenue and expenses (see Figure C) and a Statement of Cash Flows (see Figure D) to show the operating, investing, and financial activities affecting cash to be able to meet obligations.
An exit strategy is a pre-developed business development plan with the aim of withdrawing investments from it when the capital is maximum. This allows one to exit the business on more favorable terms and gain significant profit (Shields 39). A cattle ranch business can be acquired not only by a private investor but also by a former employee or even a competing company. The valuation of the industry in case of sale will be higher than the value of its assets. Buyers pay for a base of loyal customers, established business processes, a recognizable brand, and experienced employees who will remain on the farm after the sale. In addition, depending on the structure of the purchase and sale transaction, not only the assets of the business are transferred to the buyer, but also the obligations arising in the course of work.
Therefore, in case of a sale, the previous owner has the opportunity to pay off debts. One can sell a share in the business – this option is suitable for those ready to develop it together with partners. However, when selling a claim, it is worth considering the possibility of losing autonomy since the company’s budget planning and strategic decision-making will have to be coordinated with a partner.
Critical Risks and Assumptions
Risks and assumptions that will accompany our project at the stages of its launch and implementation:
- Unstable demand for products. To reduce this factor, it is important to constantly look for new markets, participate in various exhibitions, establish contacts with retail chains.
- High level of competition. In order to distance ourselves from other manufacturers, it is important to always maintain a high level of product quality, offer customers discount systems.
- The fall of animals. To prevent such a risk, it is important to monitor the health of livestock.
- Improper butchering, which will entail an uneconomical waste of funds, which is why you should look for a slaughter specialist with experience.
Hence, these risks are possible to eliminate if they are identified at the initial stages. Additionally, these threats provide the ideas on the business’ improvement and its expansion. When out ranch encounters these issues, the proposed solutions might not be suitable, thereby we will need to adjust to the situation. In general, the suggested recommendations serve as pattern for the cattle farm’s development and its further growth.
“How to Start a Cattle Ranch Business.” Truic, Web.
Hartline, Michael, et al. Marketing Strategy. Cengage Learning, 2021.
Morin, Javon. Leadership and Change Management. EDTECH, 2018.
Phillips, Clive. Principles of Cattle Production. CABI, 2018.
Shields, Greg. How to Start a Business. Bravex Publications, 2019.