What do you pay yourself?

[cowman]

I often think about this sort of thing. I was just considering my labor costs from a post below.
How much time do you put into your farming/beef operation? Do you think you deserve to be paid for your labor? I mean if it is just recreation...that is cool, too!
Now when I tried to decide a figure for labor, I put down 3 hours/cow at $25/hr.(I think highly of myself!) That is feeding/checking cows etc.? I figured that would be include winter feeding and checking cows..maybe not all the other stuff?
Anyway consider this: If you were Joe Average Albertan what would you put down for your hourly wage? Consider at times you are a manager, bookeeper, joe-boy, laborer, equipment operator, livestock specialist etc.! Say $20/hour? I mean the girls at Tim Hortons get up to $18/hr.!
So $20/hr times 40 hours/wk. times 52 weeks...equals $41,600?
Now if I only have 100 cows then my labor cost is $416/cow...200 cows $208/cow! In fact to get down to my $75/cow labor cost I might have to have 500 cows! Well I sure as hell don't have 500 cows and not sure if I would ever want to...especially so I could lose money?
Of course I obviously don't work at chasing around after cows 40 hours a week/52 weeks a year...I wonder how many people do?...and yet that is the income you give up?

[poorboy]

The hard part for labor is figuring out what is realistic labor hours and how many hours are working in the shop, mowing the lawn, talking to the neighbor, etc. In reality you should consider if you had a full time off farm job, what is the minimum number of hours that I would need to look after the cows.

I think that for a lot of the year, you would actually only need 2-3 hours per day, which is only 14-21 hours per week. 21 hours/wk x $25/hrx52wks=27300.

Most people couldn't live on this amount, and yet with mechanization,etc this is a realistic amount of time.

Wintering herds toghether with neighbors and one or both people getting off farm jobs would make economic sense. Very few jobs will provide a good living at 21 hours of work/week.

[farmers_son]

Using Cowman’s example of Tim Horton’s…

Employees at Tims get paid an hourly wage. The owner operator of a Tim’s franchise will draw out of the business for his/her living. The amount the owner will draw will depend upon the ability of the business to generate sufficient cash flow and will probably be different when the franchise is new and loans have to be repaid as opposed to an established business with little debt. I doubt very much if the owner of a Tims franchise calculates his/her draws on the business on a per hour basis. Most likely the draws on the business provide a sufficient standard of living to meet their needs and the actual time spent in the store will vary upon demand and availability of hired labour. I know I see the owner of our local Tim’s in the store quite a bit and if he were to calculate his draws on a per hour basis he may actually be making less than the employees but I am sure he realizes he is working towards owning a business that will some day generate a profit and provide a retirement and so on.

I think Cowmans examples clearly show that owner living expenses are a fixed cost. I prefer to calculate what I call contribution which is variable revenues minus variable costs per cow. The resulting contribution is what is available to pay fixed costs. If I know my fixed costs, and I do, and if I know my contribution per cow it is a simple matter to then calculate my break even number of cows. If I can keep more cows than the break even number I will show a profit. I do not really care what my draws on the farm are on a per cow basis. If my fixed costs, whether living or interest or whatever get too high so I will not be able to show a profit with the maximum contribution I am able to generate then I will have to consider reducing my living or getting off farm employment or find some other way to reduce other fixed costs.

[cowman]

Well I really doubt many Tim Hortons owners are destitute or something...sort of a license to print money in my view!
I find it funny how some people view business though? If I have X amount of dollars in my pocket at the end of the year...then I had a good year! Never mind what I had invested and I could have made the same amount sitting on my ass!
Is this good business? How should any sane citizen view the Canadian farmer? Should he in any way consider him a real businessman?

[Horse]

Cowman I truly agree with you, I have had so many people tell me that its alright to lose money on cattle because all you have invested is your feed and time . Well thats all I have to sell and if I sell to cheap there isnt anything left for me.
I dont care how you slice it you have to figure in the oportunity costs,I think a lot of those cattle feeders that claim to lose money on cattle do very well on thier silage and grain end of thier enterprize so to have a handy market for thier feed it is alright to not make any on the cattle.

[cswilson]

As the major execuetive I have a few perks-a tall beautiful secretary that cooks me breakfast and shares my boudoir. Four healthy happy slave children that can ride,fence and not complain. Trophy deer hunting just out my front door ohh every now and then we get some coin to jingle lol.

[cowman]

Well...yea... theres that to consider too!

[farmers_son]

The grass is always greener on the other side of the fence. Our local KFC closed its doors a month or so ago, apparently could not get workers.

Horse mentioned opportunity costs. An opportunity cost is the benefit lost from making one choice over another. The hours spent working on the farm could have been spent working in the oil patch. However your labour is mutually exclusive, you cannot be on the farm and working off farm at the same time. You need to consider not only the income that could be made if you worked off the farm but the cost to the farm if you were away.

We all have to manage our resources to the best of our ability. When we are talking about our time we need to keep in mind that our time is a finite resource. And yes we have financial considerations. But we also have life considerations and family considerations. I see quite a few people these days blinded by what appears to be high wages, the bright lights of the oil patch so to speak, and sacrifice family and a portion of their life span working away from home for the almighty buck.

I do not know if I make as much as the girl at Tim Hortons or not. We have a pretty decent lifestyle. I think I do pretty well. If we spent less on living we would have more money for the farm, if we spent more on living the opposite would be true. However I think the real rich person is the one who gets to spend his/her life doing something they are passionate about and if you can do that while working along side your family then that is hard to beat.

[smcgrath76]

AMEN FS.

I think that also applies to kpb's argument about off farm employment. Some people are truly passionate about all of their jobs (and some aren't).

[cswilson]

It's funny people talk about if they sold out they could invest the money and not work-but didn't the ranch or farm generate the wealth they are about to invest. If you are enjoying life-making a living and growing your business what more do you need.I could care less if a mill worker or an oilfield guy makes better money during their boom years. I started out with nothing and still have most of it left after 20 or so years lol. It's a long old life to live if your worried more about what your neighbor has. I'm in a perfect scenario -too small to threaten buying someone out but big enough that the land hogs or still polite hoping they get my place if I quit.

[poorboy]

farmers_son,

You mention that the owner of the Tim Hortons probably does not pay himself, but takes it out of the profits, which I agree with, and is probably true for most small businesses.

It is quite different if you are just a little bit bigger, where you have multiple owners like westjet has, or have common shares. In these businesses, even with 51% or more of the shares, you would actually pay yourself a wage or salary and then expect a return on your shares as well.

Hard to believe how much more earning power a large company has versus a small business.

[PureCountry]

I must say I'm with Wilson on this one. Quality of life is immeasurable, and we've gotten to the point now where we have the cows doing most of the work - finally. I'm still working off the farm of course, but that has more to do with our buying the farm from the folks, rather than the cows.

[greybeard]

My wife’s sister and her partner have a couple of very successful Tim Horton’s stores. They go in before 6 AM, 6 days a week and work about 60 to 70 hours a week. They are on call 24/7. They have about 60 employees, a problem as FS pointed out re: the KFC. We are very proud of her as she went to Saskatoon and worked as a waitress while taking her grade 12, totally supporting herself. Basically a self- made millionaire at age 40.But obviously, no time to spend the money. In order to have a business that successful, you have to manage it closely. Kind of a trap?
Now, if we are driving cattle or branding, etc. she drops everything to come and take part. . They seem to turn into big family events, enjoyed by all.
My nephew and her bought a good ranch horse to share. They soon found they both needed it at the same time. She came up to the Lazy S horse sale a couple of weeks ago and had a great time buying another.
Should I feel bad because I don’t go help her on busy weekends? Cowman, do you have family gatherings when out spraying leases?
I guess I’m saying our lifestyle looks very good to others

[rbrunel]

I farm with my dad and we are the first to get paid everymonth. We have a set salary and if it's a good year we may get a bonus. My bank had a problem with that, especially on a year when we lost money. I told him that when they lost money did he not still get paid? end of question. I figure that since we farm full time if our farm can't support the small labor force required then what is the point of doing it full time. I think the lifestyle is the perk/bonus, but some extra jingle is always nice