You Bought the Ranch or Farm, Now What?
As we have evolved from a manager of a few foreclosed properties in the early 1980s to our current role as a representative of, more often than not, “non-resident” owners of ranches or farms, it has become increasingly clear that our position with landowners has evolved.
Our role, providing resource management services, ranges from simple overseeing such as establishing budgets and paying bills with periodic reports to full-scale, day-to-day management of a ranch or farm. Overseeing has changed over the years and is very different from the traditional farm manager role that is typical in the Midwest where properties tend to be owned by “pure investors” who rarely visit their farms. In the Rocky Mountain West, Southwest and Texas, ranch owners tend to derive a good portion of their “return on investment” from the pleasure they receive both from visiting their ranch and from their personal involvement in the management of it. That is where our services thrive.
THE OVERSEER ROLE
The overseer role begins with identification of the owner’s goals, the development or adoption of an overall ranch or farm management plan and a corresponding budget. Whenever possible, we include improvement and enhancement of the property in addition to the practical day-to-day operations. We try to separate issues related to the overall improvement of the real estate asset from the more down-to-earth practicalities of the daily routine. Both are important but carry different priorities and funding sources.
ADVANTAGES OF THE OVERSEER ROLE
It is a fair question to ask “why should one invest in additional overseeing?” Perhaps that question is best answered by outlining the advantages of this relationship.
- Inherent conflict between manager and owner – On many properties, the owner of the farm or ranch is often not aware of what a ranch manager has to go through on a daily basis to deliver a happy experience for the owner. Balancing the requirements of the livestock, wildlife/fisheries, and/or farming operations with asset management concerns, enhancement of the property’s resources, dealing with the owners & guests, and ensuring their personal enjoyment of the ranch all factor in at differing levels. Cash flow and profitability can become secondary priorities. The ranch manager’s role becomes more complicated, which can lead to overstaffing and too much or too little equipment, both of which may not be in the owner’s best interest. In our overseer role, we help the owner and manager discover the best mix. Often we are able to identify and remedy problems before they become insoluble.
- Flexibility – As noted earlier, our role can range from simply establishing budgets and paying bills with periodic reports to full-scale day-to-day management of a ranch or farm. Depending on the owner’s goals and objectives, our involvement may be scaled back as the on-site manager becomes more comfortable with the owner’s expectations.
- Cost savings – Beyond providing peace of mind, we earn our keep in many ways:
- We are often able to allow an owner to hire a less experienced ranch manager or farm manager that has certain holes in his or her resume at lower cost and we can fill in the holes. Typical “holes” would be things like budgeting and/or financial skills, wildlife/fisheries and habitat knowledge, and lease development, management, and administration.
- In the area of marketing crops, livestock, and wildlife or working with outfitters and buying equipment, we are active in these marketplaces for other clients and can save a manager time and money by providing input in these areas.
- In the area of hiring high-quality contractors to perform work on the ranch, we have relationships with proven top people who have an incentive to provide high-level services to our clients because they know they will have other opportunities if they provide good service at a competitive price.
There are three underlying themes which speak to our overseer role.
- The first one is helping owners identify their goals and objectives for the ranch or farm. Whether the ranch or farm goal is agriculture, recreation, return on investment or something else, we help identify those goals and get all parties pointed in the same direction.
- The second theme is a matter of pure economics. The most expensive issue in ranch ownership is management turnover. It is both stressful and time consuming to have to deal with replacing a management team. Our overseer role is specifically designed to avoid this.
- The third underlying theme is that, for most absentee ranch owners, a significant part of their “return on investment” comes from what we call the “psychic return” which basically means the pleasure they derive from being on the ranch. The fact that we solve problems for owners allows them to have greater peace of mind and enjoyment of the property. Our role as overseer – more than anything else – is designed to maximize this aspect of ranch ownership.
RANCH MANAGERS AND STAFF
On newly purchased properties, one of the first steps is often the hiring of a suitable caretaker or manager. The concept is that we represent the owner at all times. In a perfect world with a great manager, our primary role would be to develop budgets, pay bills, and provide monthly or quarterly reports. In addition, we would schedule a predetermined number of visits to the ranch to check on progress or provide whatever level of overseeing is required. Naturally, we are available at all times to the manager and owner to consult on issues that come up; crop and livestock marketing, advice on obtaining various services, changes to the production plan or negotiating leases, wildlife/fisheries and habitat projects. At a minimum, we provide an extra set of eyes and ears for owners and, more importantly, we are available to step in immediately should it become necessary.
RETAINED SEARCH – HIRING RANCH MANAGERS AND CARETAKERS
While this is separate and distinct from our overseer role, it is an important part of our management role. It most definitely addresses two of the underlying themes mentioned in the previous section – i.e. minimizing the cost and maximizing the return on ranch ownership.
The retained search process begins with a job description – an absolutely critical part of the process. It is critical because one of the biggest causes of manager turnover is unmet expectations on either side. We force the owner to be very specific about what his or her expectations are of the ranch manager or caretaker we are hiring.
The next step is to accumulate candidates through our internal database, our many contacts throughout the industry, and advertising. Through preliminary interviews and our ability – because of our many relationships throughout our region – to check on people, we narrow the field down to a manageable number and then work with the ranch owner to further narrow down to around three candidates.
These finalists are interviewed on the ranch with the owner. The interview process is quite rigorous. It is our role to ask the hard questions and make sure that everything is covered. Often an owner will tend to gloss over important issues that need to be addressed in the beginning.
The end result is that, when we make a final selection, everyone’s expectations are out on the table and both parties are fully invested in making the relationship work. We insist on following up with periodic reviews. Our experience has been that, on the rare occasions where people’s needs and goals change, the communication has been well-established and the transition to the next manager or caretaker is a relatively painless one – contrary to the situation that occurs when there is a real management breakdown.
Over the last 25 years, as our ranches and farms under management have increased to over 800,000 acres, we have continued to refine our ranch or farm management overseer and search processes to reflect the unique needs of farm and ranch owners in the Rocky Mountain West, Southwest, and Texas. Our goal has been to assure our clients that their ownership experience will be enjoyable, problem-free and productive.