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 BLOG >> April 2017

Accounting Adventures [Management
Posted on April 29, 2017 @ 08:34:00 AM by Paul Meagher

As always, I am under the gun to file my taxes on time. Might not make it but this morning I am setting up my accounting files for my 2 sole proprietor businesses and an accounting file for my personal business (business use of home). I will also be setting up a separate accounting file for fuel costs related to my farming business.

Talked to my month-in-law about interest penalty associated with filing late if I have to exercise that option. We agreed that if I start paying off what I expect to owe before the filing date, then filing late does not have much consequence. I will start transferring money to the government today.

While I do my farm accounting, I will be scanning through Fearless Farm Finances: Farm Financial Management Demystified (2nd Edition) for potential guidance.

I completed a day of accounting on Saturday and am getting started on another day of accounting. Yesterday I spent most of my time going through credit card statements for my two businesses and assigning the transaction to various expense categories of those businesses. Within each category I order the transactions by date from earliest to latest transaction. I retain most of the credit card transaction text that accompanies the transaction.

What I am doing is setting up the conditions for reconciling my paper trail with the official version of my accounting year. My paper trail is organized by month and I will be able to sample transactions from my official accounting version and see if I can find the paper receipt for that transaction. I don't have to do this for all the paper receipts if I have a high level of confidence in the correspondence of the official accounting and the paper trail. I'm not an accountant, they probably have more rigorous methods than this.

Getting all transactions into time ordered sequences is the key, for me, to getting paper trails and accounting records reconciled efficiently. I still have work to do on this today but hope to get to the point of recording totals into the Statement of Business Activities that I have to complete for each business that I operate as a sole proprietorship entity. In the case of farming, the Statement of Farming Activities form I have to fill out already comes with many different categories than the generic Statement of Business Activities. Some accountants will not deal with farming businesses because it is a separate beast and you sometimes need specialized insights into farming (and sympathy) to do it best. I think it is helpful, however, to learn how to do it myself so I better appreciate how the government likes to do their accounting on farming activities.

I'll be updating this blog with new accounting/finance related content as the day progresses.

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Getting Physically Organized [Finance
Posted on April 24, 2017 @ 02:17:00 PM by Paul Meagher

I am a fan of April Wilkerson's Do-It-Yourself YouTube Channel. She has developed lots of great video content and her channel continues to evolve. Recently, April and her husband sold their house so she does not have a shop to work from. Her husband agreed to share his shop space with her and this video shows them getting the shop organized for their upcoming DIY videos.

This video motivated me to get myself organized to get my taxes done. I am not the best example of how you should manage your taxes as I leave it to the last minute and throw all my receipts into piles that have to be sorted out later. If you find yourself in a similar situation, maybe you will find my method of getting receipts organized useful.

Below is a photo of my office computer and chair. In the middle, is a pile of receipts. The receipt piles come from different times of the year. I have 12 open folders positioned around my office chair, one for each month of 2016. The first level of sorting for me is to simply move all the receipts into the month folders. I do try to keep automotive receipts, gas receipts, construction receipts, small tools, and office receipts somewhat separated inside each folder but don't try to organize them more than that as I'm doing my initial month sorting.

This setup allows me to keep working on my computer and listen to YouTube videos for entertainment as I sort my receipts. Organizing myself by month allows me to more easily compare my receipts against my bank and credit card statements which are also organized by month.

Once I have my receipts organized by month along with printed monthly bank and visa statements, I then go through each folder month by month and assign receipts to expense categories I've developed for my sole proprietorship businesses. When I finish going through all the months I can then tally the totals in all my expense categories for 2016. The rest of my taxes are relatively easy to do once my expense totals for different expense categories are calculated.

I use an accountant to help me with my corporate taxes which are mostly all digital transactions so the organizational process is much different. I do try to improve my book-keeping system a bit every year. Last year I setup separate banking/credit card accounts for each separate business (3 of them) and my personal account. I can do alot more of my accounting work digitally this year so am less reliant on sifting through paper receipts; however, it can still be difficult to reconstruct what you did last year from a simple bank transaction - you often need the paper receipt to figure out what you purchased.

Someone more organized than me would be updating their expense categories on an ongoing or monthly basis. I hoped to do that last year, but it never happened and I'm not doing so hot again this year. I may have to repeat this process again to get caught up for 2017 so I have a better sense of what my expenses are. I know that monthly tracking of expenses is the next improvement I have to make to my accounting system so I have better real-time information about the state of my separate lines of business.

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Resilience Thinking [Farming
Posted on April 20, 2017 @ 07:52:00 AM by Paul Meagher

I've been spending the last week at my farm property juggling the work of managing these websites with the work of pruning 2 acres of younger grape vines (6 years or less). I haven't had much time to blog this week but am waiting for temps to increase a bit before I head out for a couple of hours of pruning.

I waited until now to prune because I can also use my cuttings to replant where vines have died, gone missing, or are not doing that well. My usual routine was to prune earlier than this, turn my cuttings into started vines in my greenhouse, then plant them out around the end of May or early June. This was necessary when I was adding new rows to my vineyard, but now I am done planting out new rows and just have to make sure all slots in the rows have vines growing in them. Easier said than done.

Because we get high winds in winter and are at the edge of the growing climate for cold hardy wine grapes, I have adopted an aggressive replanting strategy. That means for every missing slot I plant 2 vine cuttings and plant cuttings where a vine is not looking very promising.

Planting two cuttings per slot is still no guarantee the slot will catch as some slots may be plagued a suffocating weed, poor soil condition, heavy accumulation of snow, in the path of a wind funnel, near a rodent habitat, in an erosive downhill area, or subject to some other affliction that renders it less likely to able start a vine.

The word resilient is used alot these days and I guess I'm looking for ways to make the vineyard more resilient against macro and micro-climactic conditions. I'm less concerned with resilience against rising temps than resilience against harsh winter winds that also like to topple trellis posts. I'm starting to reinforce my wooden posts with metal t-bars to make the trellis system more resilient against high winds.

Resilience is about looking around and looking ahead for things that might do harm to your business and adopting strategies that will eliminate or reduce the liklihood that it will cause harm. Optimism is what made me plant this vineyard in the first place, but resilience thinking is what will help to ensure it will persist.

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Personal Values Worksheet [Decision Making
Posted on April 13, 2017 @ 07:09:00 AM by Paul Meagher

I started reading Richard Wiswall's book The Organic Farmer's Business Handbook: A Complete Guide to Managing Finances, Crops, and Staff - and Making a Profit (2009).

A particular strength of the book is an enterprise budgetting approach to tracking expenses, revenues and profitability accross multiples lines of business. Each crop is considered a separate line of business. I recommend the book as a useful reference for learning how enterprise budgetting works in an organic farming context that makes enterprise budgetting concepts easy to read about and understand. A real estate entrepreneur managing multiple flips, for example, might benefit from seeing a practical example of how enterprise budgetting works. Adapt as required to your context.

The motivation for today's blog, however, comes from Richard's discussion of goal setting and an interesting worksheet he presented as part of that process. The worksheet is called the Personal Values Worksheet (p. 9) and the idea is that you set your goals based upon your values. You can use the worksheet to clarify what values are important to you. According to Holistic Management, the process of personal (and business?) decision making and goal setting should derive from clarified personal values so spending some time studying and completing this worksheet might be a useful exercise.

Personal Values WorksheetABCD
Accomplishments (achieving, master)    
Affectation (close, intimate relationships)    
Collaboration (close working relationships)    
Creativity (imaginative self-expression)    
Economic Security (prosperous, comfortable life)    
Exciting Life (stimulating, challenging experiences)    
Family Happiness (contented with loved ones)    
Freedom (independence and free choice)    
Health (for self, others, and environment)    
Inner harmony (serenity and peace)    
Intellectual stimulation (thought provoking)    
Order (stability and predictability)    
Personal growth and development (use of potential)    
Trust (in self and others)    
Pleasure (enjoyable, fun-filled life)    
Power (authority, influence over others)    
Responsability (accountable for important results)    
Self-respect (self-esteem, pride)    
Social service (helping others, improving society)    
Social recognition (status, respect, admiration)    
Winning (in competition with others)    
Wisdom (mature understanding of life)    

The originator of the Personal Values Worksheet is Ed Martsolf and you can follow this link to download the instructions for completing the personal values worksheet (PDF).

What I like about this worksheet is that it provides concrete examples of what we mean when we use the term values. It shows the diversity of values and offers a useful partitioning of the space of all values. The worksheet rating system (columns A to D) is also an interesting approach to clarifying value preferences.

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Introduction To Making [Creativity
Posted on April 10, 2017 @ 11:03:00 AM by Paul Meagher

Laura Kampf is a maker with a growing audience on YouTube. Her videos generally contain no words which is limiting in some ways but also makes them more universally accessible. In this video she modifies a bicycle to make it useful for picking up a case of beer.

Modifying bicycles is a great way to engage in the "maker" movement. There are a tons of modifications you can make to bikes to change the aesthetics or create other uses for them. There are lots of old bikes available for free or cheap and the chains, gears, wheels, and cables can be used to make other contraptions.

I was recently reading about the Wright Brothers who owned a bicycle shop and are famous for the first controlled, sustained flight of a powered, heavier-than-air aircraft on December 17, 1903. They used sprockets and chains from the motor to drive the propeller. They also figured out how to stop the plane from rolling side to side and tipping up and down. Perhaps they used chains and sprockets, or just cables, to control the stabilizers. An example of how an understanding of bicycle parts and mechanics can be used to innovate in another product line.

The humble bike can be used as a sustainable means of transport but, with modification, it offers many other uses. It has been used to power water pumps, cultivate fields, power blenders, generate electricity and much more. Modding bikes was my first introduction to making when I was a kid. I, like many other kids at the time, modified my banana bike by cutting off a section of the forks and hammering in another set of forks to make it into a hot rod bike (i.e,. a chopper). If I knew how to weld and shape metal back then like Laura Kampf, I would have had the coolest hot rod bike around.

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The Battery-Powered Outdoor Equipment Market [Future
Posted on April 4, 2017 @ 09:57:00 AM by Paul Meagher

I recently received a sales brochure from Stihl because I purchased a few of their gas-powered string trimmers in the past to deal with grass and weeds around my organically grown grape vines. They devoted the front page to the brochure to promoting the 4 to 8 hour continuous runtime of their AR 3000 backpack battery option. This technology is not new (as demonstrated in this 2013 ad below) but the market for it is arguably starting to catch up.

The reason I am mentioning this is not to promote Stihl's offering as other companies such as Husqvarna offer a similiar backpack option that may be better in certain respects (e.g., the power cords may not get in the way as much when operating). Rather, what interests me is this statement from the Stihl brochure:

To no one's surprise, the battery-powered outdoor power equipment market is growing exponentially with each passing year.

If someone were to ask me where we are seeing huge market growth today, I would agree that the "battery-powered outdoor power equipment market" is a huge area of growth. We are only starting to see some of the innovations that might arise from being able to carry around a longer running and more powerful energy supply on our backs. These back packs are quite expensive and marketed more towards the professional landscaper, however, what happens if the prices come down and the number of gizmos we can plug them into goes up? All the power tool brands are investing heavily into lithium ion battery technology and trying to differentiate themselves on that basis. I am contributing to this growth in my own small way by gradually replacing all my corded tools with their non-corded versions. The main drawback to the battery powered backpack is that it still involves a cord, albeit one not plugged into a wall plug. Having that much power at your disposal, however, means you can operate some more power hungry tools for a longer amount of time making it a more feasible replacement for gas-powered versions.

I do like the idea of running a string trimmer without producing gas fumes, however, I am under no illusion that this is a completely green technology because the power plants that I am getting my energy from are still burning fossil fuels to generate my power. That is why I see these technologies only reaching their true potential when offered in conjunction with local power generation as well - solar charging, wind-powered charging, micro-hydro, etc... This "battery powered outdoor equipment" market may finally give us sufficient reason to invest in renewable energy technologies at the home scale. Maybe you don't want to invest in enough renewable energy capacity to power your home, but you might be willing to invest in enough to recharge the battery packs for the increasing number of battery-powered power tools you own?

Another thing Stihl could develop would be an electric bike that I can plug my back pack into so that I have more reasons to make this investment. Maybe I can run a Stihl coffee pot and hotplate with it on the job site as well? Maybe an exoskeleton attachment to assist me in lifting some heavy logs?

How big is this "battery powered outdoor equipment" market going to be and how will it evolve in the next few years? I don't know the answer to this question but it cannot be ignored if you are an entrepreneur or investor looking for an "exponentially growing market". Maybe you will have to work within the Stihl, Dewalt, Husqvarna, Echo, etc... ecosystems to develop new innovations just like software developers innovate within the Microsoft, Apple, and Google ecosystems. If the companies won't open up their platforms for outside innovation then we'll need an open-source battery-powered platform that will if that is possible with all the licensing and patents involved.

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