Part two on how strategic business management can add productivity and dollars by better using your operation's natural resources
Last month we discussed grazing systems as a way to achieve more efficient, profitable utilization of the natural resource asset. The icing on the cake in terms of long-term benefits, however, is that a grazing system will result in increased wildlife.
Hunting, fishing and a place just to "stretch your legs" is becoming more unique and of greater value. Ranchers often take this resource for granted and allow friends, neighbors, distant relatives or mere acquaintances to take full advantage of a privilege that should command compensation. Literally thousands of dollars are available to you if you make the sacrifices necessary to accommodate John Q. Public.
Opportunity Galore Okay, so there's opportunity, but how do you get started and what does it mean financially?
First, closely evaluate what it is you have to offer and what audience it would attract. It may behoove you to bring in a wildlife specialist to help determine this, but certainly to help establish a wildlife management plan. A wildlife consultant may charge anywhere from $250/day to a percentage of the take, but he brings an outsider's perspective that will result in more options and greater flexibility.
If yours is a smaller operation and lacks adequate landmass, cooperation with neighbors is normally your only option. The environment, the manager, then the management techniques will determine the product or products that offer you the greatest market potential.
Don't overlook any possibilities. One ranch I work with markets prairie dog hunts at a $100/day. One man's trash is another man's treasure.
Before you decide to go full-bore into the recreation business, contact your insurance agent and attorney. The insurance agent will advise you on coverage options and their cost. An attorney will detail your legal exposure and ways to avoid a possible lawsuit.
Ready For Customers Okay, you've made the conscious decision to develop and market your natural resources. You've established the product or products that are to be marketed. Your liability insurance is in place and you have your "hold harmless" waivers in hand. Now what?
You can't just go down by the gate and wait for your first customer. You need to promote.
Word of mouth is always the best sales tool but it requires pleasing the customers you already have. So, advertise in recreation/hunting/fishing magazines or send them press releases. Consider providing a "free" weekend to the editor of one or more of the magazines, which promotes products similar to what you are selling. You can also target businesses looking for places to entertain clients and potential clients.
In the second or third year, develop a flyer and send it to prospective customers or rent a mailing list and mass mail. Promotions must be multi-faceted and reach many potential customers.
The problem is that this all costs money. Start by developing a business plan that includes a recreational enterprise that has a planned and budgeted promotional plan. What you spend on promotions is determined by your potential to produce income. Typically, promotional expense is the second largest cost category and may constitute as much as 35% of your recreational enterprise budget.
Advertising rates are as varied as the colors of the rainbow. To have someone write and mail a press release for you will normally cost $250-1,000. Fliers can run 8-75 apiece. Mass mailing bulk rates range from 18-32, or more for heavier packages.
Mailing lists also vary in cost, but normally can be purchased for 2-10 per name. If renting or purchasing a mailing list, target a magazine where you've had success getting press releases printed before. Be certain the magazines you target hit the desired market for your company.
Establishing Your Prices To establish prices for your services, call operations utilizing the same or similar recreational enterprises. A big part of the price structure is simply Economics 101: supply vs. demand. But creating demand and your ability to service the customer plays an even bigger role.
Some of my clients charge the following:
* Dude Ranch type situation: $5,000 for five days and six nights (up to six people) with many activities requiring an extra fee.
* Whitetail deer: $1,500-5,500
* Antelope: $500-1,000
* Bobwhite quail: $250-500/gun/day
* Ringneck pheasant: $275-400/gun/day.
* Trout fishing: $150/person/day
Often, recreation can provide $3-10/acre in additional revenues, with little or no additional capital expenditure and a budgeted expense of 50-$2/acre or less. As producers, you should establish your property as "sacred ground." Access by the general public should always be for a fee.
My clients have a net income from various recreation products of as little as $1,200 to as much as $100,000. Smaller operations should consider cooperating with neighbors to form hunting or fishing clubs. The financial reward for each member should be according to the individual level of participation. Costs should be split according to the percentage of benefits.
Substantial Income Potential The bottom line is that a recreation enterprise has the potential to produce a substantial amount of additional income previously left on the table. It's not for everyone, but if you choose to participate, carefully choose the degree of participation and people contact.
It can be as little as leasing the land to your accountant or attorney's hunting club by the acre. In this form, you have little, if any, personal contact compared to an intensive recreational enterprise like a Steamboat Springs dude ranch.
Whatever you decide, make it work for you first. You are the landowner. If you want to save some hunting or an area for yourself, put it in the lease agreement. If no one accepts your offer, you're no worse off than before a recreational enterprise was dreamed up.
Strangers usually turn into friends on Ron and Lois Wanner's Knife River Ranch. Since 1996, the Golden Valley, ND, family has operated a "ranch vacations" enterprise as a means of diversifying their beef cattle and grain operation. So far, guests from 25 states have taken advantage of the Wanners' year-round ranching and outdoor vacation experience.
The Knife River Ranch has quickly become a popular destination for vacationers, hunters and family reunions. The Wanners offer six cabins with views of the scenic Knife River, a lodge, bath house and Lois's ranch-style meals (utilizing Knife River Ranch beef). Lodge and bath house facilities are handicapped accessible. The operation includes Ron, Lois and their three children: Rebecca (17), Adam (15) and Justin (9).
Ron had long desired to diversify his 7,000-acre, 330-cow commercial cattle and farming operation. He knew that there was a thirst by Americans for the ranch, both for relaxation and sport. "We love the ranch and we just wanted to share it," Ron says.
Game is plentiful on the ranch. The winner of the Remington Wildlife Stewardship Award for upland game management, Ron has long managed to protect and preserve wildlife on his land. The property is a wonderland of deer, game birds and fishing.
"The extra cash flow has helped. In farming and ranching, you typically have just a one-time payday. The vacation business gives us money every month," Ron says.
Spreading The Word The biggest challenge, he adds, is just getting the word out. He says he's spent over $9,000 in sport shows and advertising. But they had a four-fold increase in guests this year over last. And, they received additional exposure this year by winning the Private Travel and Tourism Entity Award from North Dakota Tourism officials.
The Wanners don't want their business to grow beyond what the family can handle by itself. The enjoyment and a desire to provide personalized service are the reasons.
Ron estimates a 15-year payback on construction of the facilities that allow them to accommodate 30 people at one time. But, he feels that word of mouth and reasonable rates protect them in the event of a general economic downturn.
"We tend to draw out-of-state people who are used to spending more than we charge. We also work to keep our prices reasonable, and offer various family packages that will fit any budget," Ron says.
They also attract small family reunions, even other farmers and ranchers who want to get away and experience some different country. They're also seeing some success now in attracting foreign visitors who expecta true ranch experience.
"This is a working ranch, not a dude ranch," Ron says. "Our guests like to experience everyday things like fixing fence, checking bulls and working with the cows and being out on the open range."
Knife River Ranch Vacations is located in southwest North Dakota. For more information call 701/983-4290 or visit their website at www.dakmall.com/krrv/