Wyatt Earp's methods were different than those of other professional buffalo hunters. By using cost-volume-profit analysis, he saw that by killing less buffalo, he could make more money.

Most people today know Wyatt Earp as one of the most respected and feared lawmen of the Old West. He helped bring law and order to Dodge City and Wichita, the toughest frontier towns. He became the stuff of legend at the O.K. Corral in Tombstone, Arizona, where he joined his brothers Morgan and Virgil, and his friend, Doc Holliday, in a deadly face-to-face gun battle with the notorious Clanton gang. Wyatt survived and lived to old age, never having been grazed by a bullet.

Wyatt's earlier career pursuits, though perhaps just as dangerous, are not as well known: teamster, gambler, and buffalo hunter. In fact, during the period 1871-74, he made quite a tidy profit in buffalo hunting using methods that were revolutionary at the time. He developed his methods by observing what more experienced hunters were doing and making improvements - improvements aimed at ensuring that his hunts were more efficient and profitable. In doing so, Wyatt made effective use of cost-volume-profit analysis, a key analytical tool for the 20th century management accountant. Wyatt's approach was surprisingly sophisticated for its time and circumstances.

To illustrate Wyatt's methods, we present here possible conversations between Wyatt and a more experienced buffalo hunter as they might have happened 123 years ago. We also include numeric schedules implied (not actual) from narrative accounts of buffalo hunting activities of Wyatt and other hunters.

A Stubborn Cuss

"Wyatt Earp, you are the stubbornest cuss I've run up against. Why can't you listen to reason?" thundered Link Borland. "There is no way you're gonna make any money buffalo huntin'. And you'll probably get yourself killed to boot. Just another dead man layin' out on the prairie ... with empty pockets!"

Wyatt, being a deliberate man, sized Link up. A few moments went by before Wyatt spoke. "I know you don't approve of my methods, Link. But I've got it all figured out. I'll shoot fewer than half the buffalo you will and make more money doing it. Let me do a better job of explaining it to you."

Professional Buffalo Hunting

Professional buffalo hunters in the 1870's were a tough breed of men. While buffalo hunting could be very profitable, it was also very dangerous. Buffalo stampedes and Indian attacks were commonplace. Wyatt Earp's methods looked particularly foolhardy to experienced buffalo hunters because they seemed to be more dangerous and less profitable.

To complicate things, there were many amateurs at work in buffalo hunting. Would-be hunters from the East were attracted by tales of the riches to be made in the buffalo trade. Most of these newcomers were ill-equipped for the venture and dropped out. But their places were quickly taken by other neophytes seeking their fortunes. It is estimated that at the peak, as many as twenty thousand men were hunting buffalo on the central western plains of the U.S.

Even the practices of successful buffalo hunters tended to be somewhat inefficient. They typically concentrated on maximizing revenues, paid little attention to operating costs, and measured success by how much money was left in their pockets at the end of the hunting season. The best hunters made money largely through sheer volume rather than smart business practices. It's no wonder that Wyatt's methods seemed strange to them.

The buffalo-hunting season normally ran from December to March when the buffalo had their thick winter coats. Professional buffalo hunters typically used a large hunting party to set out on the range in search of buffalo. There would be 12 men and four wagons, each pulled by a team of four horses, plus four more horses for riding, a total of 20 horses. The crew was composed of the four drivers, the stock-tender, camp watchman, cook, four skinners, and the hunter himself.

While a herd could consist of thousands of animals, buffalo would actually graze in small bands. The hunter would set up his "stand" on a nearby rise in the ground. From this fixed position, he would then shoot as many buffalo as he could (but no more than his skinners could handle in a day). This number would vary by how many animals were in the band and whether they stampeded when the shooting started.

TABLE1

WYATTEARPBUDGETFORASEASONOFBUFFALOHUNTING

MoneyIn

Hides$2,620

Meat1,120

Tongues730

Finetrophyspecimens150

4,620

MoneyOut

Horsesandwagons462

Supplies660

1,122

Profit3,498

Skinner'sshare1,749

Wyatt'sshare$1,749

NOTE:Basedonafour-monthseasonof66goodshootingdays.Numbers

arenotactualbutderivedfromnarrativediscussion.

The money received from selling the hides and meat was roughly split into two equal parts. One half went to the hunter, from which he paid all the expenses. The other half was divided into as many shares as there were drivers and skinners, and a share was paid to each helper as his seasonal wage. The hunter usually considered himself above skinning the animals and so paid handsomely to have others do it for him.

The Wyatt Earp Approach

Wyatt began his buffalo hunting venture as any good entrepreneur should - with a budget (Table 1). He first carefully estimated the total cost of a season's hunt. He then roughly projected the number of animals he could shoot and skin, the cash to come from the hides and meat, and his total expenditures. He also developed certain theories concerning methods of hunting that he felt were the most efficient.

Wyatt saw a number of flaws in the way the typical buffalo hunter ran his operations. First, he recognized that, although the typical hunting party was theoretically capable of shooting and skinning 100 buffalo per day, few were able to actually do this consistently. Due to various uncontrollable factors, the average take was below 50.

Wyatt saw that the typical hunting party had considerable idle capacity that came at a sizable cost to the hunter. So Wyatt scaled things down significantly. He decided to use one wagon plus four horses and another horse for riding in place of the four wagons and 20 horses other hunters used.

Wyatt hired one good skinner in a profit-sharing arrangement. The skinner would drive and cook in addition to skinning, and Wyatt, going against the status quo, stooped to assist in the skinning and butchering. After the season was over, Wyatt would keep the wagon and the horses, deduct all other expenses from the gross receipts, and share any net profit equally with his skinner.

Wyatt's sense of efficiency extended to his selection of a firearm. The weapon of choice for professional hunters was the celebrated "Sharps Buffalo," a heavy, expensive rifle using a massive .50-caliber bullet, two inches in length and one-half inch in diameter. The rifle had a range of a thousand yards, prompting an Indian saying that the rifle "shoots today, kills tomorrow." The ammunition for the Sharps rifle was very expensive, and the rifle barrel had to be cooled down by water after every two or three shots. Wyatt decided to shoot from a distance closer to the grazing buffalo than normal. This allowed him to use a shotgun in place of the Sharps. The shotgun used less expensive ammunition and could be fired more quickly without pause. Naturally, it was much more dangerous to shoot at Wyatt's distance of 50 yards but he was able to reduce the risk through the shotgun's more rapid fire and his careful choice of a shooting pattern that directed the remaining buffalo away from him.

Also Wyatt chose to hunt in regions where there were fewer buffalo but not as many hunters. At the time there were plenty of buffalo on the plains, but the large hunting parties made the herds skittish. It would have been more difficult for Wyatt to use his strategy of shooting from close range. As a result, Wyatt and his skinner were more isolated and therefore more susceptible to indian attack. And the larger hunting parties could "circle the wagons" in the event of attack, a strategy not available to Wyatt with his single wagon. Fortunately, the danger of Indian attack did not materialize for him.

Lower Volume, Higher Profits

"I understand what you're tellin' me, Wyatt. But there's just no way you can shoot more than 25 buffalo a day with that setup. And that's stretchin' it I always have a few days where I'll shoot 75. I make my big money on those days." "Link, my plans are based on 20 a day. I don't need to average 40 or 50 a day to cover my expenses. You're right - I couldn't handle more than 25 a day but I don't need to. I'll show you the figures."

TABLE2

COMPARATIVEDAILYPROFITSTYPICALPROFESSIONALHUNTVS.WYATTEARP

HUNT

TypicalHuntWyattEarpHunt

Revenue$150.00$70.00

Expenses

Drivers,skinnersandotherhelpers75.00(*)

Horsesandwagons20.007.00

Supplies30.0010.00

125.0017.00

Profitfordayoftrading$25.0053.00

Less1/2forskinner26.50

WyattEarpprofit$26.50

Revenue:

Typicalhunt:50buffaloperday@$3perbuffalo

WyattEarphunt:20-25buffaloperday@$3perbuffalo

*Calculatedasanaverageofone-halftotalrevenue,butpercentage

wasnotcontractual.

Numbersarenotactualbutderivedfromnarrativediscussion.

Wyatt could indeed make more money in a day with his methods than his competitors (Table 2). Even though he was limited to 25 buffalo a day, his lower operating costs and unconventional hunting methods provided him a relatively stable profit opportunity with less financial risk. For example, Wyatt's investment in wagons and supplies was substantially lower, so a much smaller volume was needed. And the profit-sharing arrangement with his skinner reduced his exposure to unexpected downturns in volume. In 20th-century parlance, he had a lower break-even point and a lower degree of operating leverage. (Operating leverage is the mix between fixed and variable costs. A higher degree of operating leverage - more reliance on fixed costs in the mix - leads to greater profits when volume is increasing but erodes profits faster when volume declines.)

Wanted: A More Exciting Line of Work

Wyatt only stayed in the buffalo hunting business for three years. But those years were enormously profitable for him. In 1872 for example, he earned a profit of $2,500, far exceeding his own expectations. But he could see that over-hunting was bringing tough times ahead for the buffalo hunter.

During his short stint as a hunter, he broke with traditional operating practices of the day and used financial information to make a variety of shrewd decisions that translated into higher profits. Wyatt had all the makings of a first class accountant ... except that a new career beckoned.

"I give up, Wyatt. You've got some pretty smart ideas after all. You'll probably be a millionaire in 20 years."

"Buffalo'll be gone by then, Link. Besides I'm looking for a more exciting line of work."

Thomas L. Barton, PhD, CPA, is a professor and KPMG Peat Marwick fellow at the University of North Florida. William G. Shenkir, PhD, CPA, is the William Stamps Farish Professor of Free Enterprise at the University of Virginia's McIntire School of Commerce. John E. Hess is a staff accountant at Arthur Andersen LLC.

The authors would like to thank research assistant Elizabeth M. Arditti for her help in researching this article.

A list of references used in this article is available from the authors by request.