When multiple generations work together on a family ranch, unclear expectations can create unnecessary challenges.
Even though it’s bitter cold in some areas of the country right now, it doesn’t mean ranchers aren’t working hard outside and breaking a sweat. With hay to be fed, frozen waterers to thaw, bedding to lay and preparations for calving season underway, there’s a lot of work to be done when others might be taking a snow day.
Ranching is certainly a work-intensive career. For aging ranchers who aren’t as spry as they used to be, having the younger generation around to put in some “sweat equity” can be a welcome and valuable thing.
Sweat equity can be equally rewarding for the younger generation. Particularly with today’s prices for cattle and land, the capital requirements of getting started in ranching can be overwhelming and nearly impossible to attain. That’s why partnering up with the older generation can be a wise investment for younger folks, even if it means being the designated slave labor for years.
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By definition, sweat equity is an interest in increasing the value in a property earned from labor toward upkeep or restoration. The term is used to describe the value added to real estate by owners who make improvements by their own toil. The more labor applied to the home, and the greater the resultant increase in value, the more sweat equity that has been gained. What applies to real estate also applies to a ranch. The more upkeep and improvement that’s put into the ranching enterprise, the more it is worth in the long haul.
My folks got into the cattle business by taking cattle on shares with my dad’s dad. My dad took my grandpa’s commercial operation and made it into a successful purebred business, adding value to the ranch by bringing in higher-value cattle to sell to commercial operators in the area.
My husband and I invested in the business when we moved back to my family’s operation and started doing some of the heavy lifting around the place. Instead of taking a market share of my dad’s customers, we have had to find ways to diversify by bringing in another breed and investing more in the marketing to expand the business instead of dividing up the existing shares.
In turn, my folks have been generous by co-signing on some loans, offering equipment for us to use instead of having to invest in our own. Just as valuable is their wisdom and advice as we stumble around in our youthful years of getting established in the business.
As a young person, sweat equity can only work if both parties clearly understand each other’s expectations. It would be heart-breaking to put in decades of sweat equity into an operation, only to discover the older generation never had any intention of passing it along or making it possible for that individual to invest once the owner hits retirement age. Equally challenging for the current operator can be making an immediate commitment to that younger generation. However, this gap in expectations and understanding can be solved with a little communication. Nonetheless, the arrangement can be a difficult situation to navigate, and each family operation has its own unique set of challenges.
I bring this up today because I would like to hear from all of you on this subject. If you’re in the position of putting in years of sweat equity, what is your incentive to stick around? Does your operation have a road map that lays out what to expect in the decades to come?
And, if you’re the current owner and operator, how heavily do you rely on a younger family member to work on your ranch? What is sweat equity worth to you? Does it come with any guarantees on your part? Share your stories, advice and experiences in the comments section below.
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