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Posted on March 13, 2019 @ 07:02:00 PM by Paul Meagher
In my last blog on remote land investing I discussed some of the factors that drove me and my wife to purchase a remote 9 acre lot. That investment, however, is only a small part of the remote land investing me and my wife did within the last 8 months. We also purchased some nearby lowbush blueberry fields, forested land, and wetlands on the other side of the road from the recently purchased 9 acre parcel.
The decision to purchase the first wild blueberry field was driven by different factors than the 9 acre parcel:
My main farming enterprise was focused on making grape-based wine but it was proving to be a long hard slog to get the 2 acres of production required to apply for a mini-winery license. The prospects for selling grape wine from the farm were too far into the future with alot of unpaid work in between. I'm not getting any younger and can't afford to keep doing farming for exercise. What to do? It is hard to fully pivot from 1.70 acres of planted grapes vines even if you are making unsaleable wine from them every year.
Where the wild blueberry fields are located is near a place where a good buddy of mine has a cabin. I grew up in a nearby village so I've been traveling these remote back roads since my childhood. My buddy took me up to the upper blueberry field where he likes to watch the sunset. Wow!
Local wild blueberry prices have been in the toilet for the last few years. Many blueberry growers are not harvesting/maintaining their fields and are selling unique agricultural land cheaper that it might otherwise sell for. I was offered a deal I couldn't refuse to acquire the largest parcel.
Before we started acquiring more land last year our farm was 61 acres in size. It is now around 190 acres in size. A 3x scaling. What growing the acreage of the farm does for me is give me hope that the farm has a plausible chance of breaking even in the near future. The 14 acres of wild blueberries on it gives me that hope. This allows me to apply for a non-grape winery license because I have more than 2 acres of non-grape crop in production. I intend to make the argument that my grape berries are for blending and can also be used to make my wine. I have 30 carboys of wine brewing from last year's harvest. I am trying to determine which blueberry/grape blends might be the ones to scale up in next year's wine making.
The point of telling my personal investment story is to make the idea of remote land investing more complex and textured. It is not just about dollars and cents. In my case it resolved the issue of making a necessary pivot away from grape-based winemaking while not totally walking away from a sunk investment. The peace of mind that resolution gave me was priceless. I don't have to declare the farm startup a failure just yet. The sales taxes we spent to acquire the land will be coming back to the farm because it is "losing money" so that will help when tax season comes this year. Finally, I do think the price of lowbush blueberries will go up again and people will begin paying more for land with this incredible agricultural resource on it. Real estate prices in the nearby rural villages and towns are going up and could spread into the more remote areas we now own. My strategy for most of the acreage is to hold and improve and see what happens. I do want to dabble in developing some permaculture inspired vacant lots for sale.
Here is a video of the blueberries used to make my 2018 vintage blueberry wines. A light phenomenon known as golden hour appears to kick in at the end of this video.
Black bears (Ursus americanus) also like wild lowbush blueberries (Vaccinium angustifolium) and may be a significant source of manure in the fields. I was in my truck when I encountered this black bear. This photo was from 2013 and was the last time I saw a black bear. I do see fresh scat in the blueberry fields so they are around. I intend to continue sharing the blueberry bounty with my wildlife neighbors.
Below are a couple of videos by the Pretty Archie band that I've been keeping my eye on. I had a chance to see them performing recently. Great show. I'm listening to alot of their music lately. Poor Boy is a bluegrassy song about having no money and the joy of drinking homemade wine with your girl. Also the pain of losing your girl because of the homemade wine.
Hardwood Floors is another song from the same recording session that is also worth a listen.
Posted on March 1, 2019 @ 06:50:00 PM by Paul Meagher
This week me and my wife finalized the purchase of 9 acres of remote vacant land. Here is an aerial photo of the parcel we purchased.
You can generally purchase remote vacant land much more cheaply than land in suburban areas, unless the land has valuable agricultural/forestry resources on it, has particularly nice views or is improved in significant ways.
One question you might ask about vacant land is how much it might appreciate without doing anything to improve it. We purchased the land for $9,000 but it came to $11,390 after sales taxes and lawyers fees. I will be able to claim the sales tax back ($1,350) as part of our registered farm partnership so an accurate final acquisition cost is $11,390 - $1350 = $10,040.
Let us assume that 5 years later I was able to sell the land for $15,000. The sales taxes I collect on that amount are irrelevant to calculating my rate of return as I have to return the collected taxes to the government. I would, however, have to deduct my lawyers fees from $15,000 to calculate my rate of return. Over a 5 year period I assume the lawyers fees would rise from $1,040 to $1,400 so the final amount I might make from this transaction is $15,000 - $1,400 = $13,600. Obviously, lawyers fees can play an important role in determining the amount of profit you make on a transaction this small.
Finally, let us assume that land taxes are $100 a year so over 5 years that amounts to $500 to hold onto the property. To compute my rate of return I need to subtract the land taxes as well: $13,600 - $500 = $13,100. An important thing to note is that as soon as you start improving your land your land taxes may go up, especially if you add a building to it. This is why some remote land investors specifically look for vacant land to invest in.
So $13,100 - $10,040 = $3,060 is the overall profit in a passive investment scenario (ignoring sales broker costs if you can do a private sale like I did to purchase this property). If we divide $3,060 by the 5 years we held the land that amounts to $612 per year in profit. If we divide $612 by the original investment of $10,040 that amounts to a 6 percent annual return on our original investment amount. Not great perhaps, but better than putting it in a savings account earning very little interest. If you don't get the profit you are looking for, maybe you will have to hold it a bit longer in the hopes that you will get the return you want.
If you leave vacant land alone it may appreciate or depreciate in value. If it was an open field, and it grows up in alders and low value wood, perhaps the land value will depreciate. If the land was a growing forest, then after 5 years of holding it may have marketable wood that can be used or sold by the new land owner. Maybe that takes 8 years to happen. Often it will be real estate values in nearby areas that are more populated, and the scarcity of available land to meed demand, that will have the most impact on the price you can ask.
My intention is not to hold this particular piece of property as a passive investment but before spending money to improve the land it might be worth trying to estimate its value as a passive investment so you can decide if your improvements are going to generate a significantly higher return or whether you are just spending alot of time and money for very little gain. There is risk in developing vacant land because there may be a good reason why it is vacant. In this case, road access in the winter is very challenging as snow plows don't service this road in winter unless the only person who lives on this road is staying in his cabin. He takes off after xmas. There used to be many more people living in this area 100 years ago but it was too remote for them so they gradually moved away.
On the other hand, we aren't making any more land, there are some spectacular views around here (i.e., view of lake on one side, ocean on the other), real estate values are increasing substantially in nearby rural towns, and people may want to get back to the land and enjoy greater privacy and freedom during warmer parts of the year. Maybe 3 acre lots could each be sold for $15,000+ a piece if they were surveyed, deeded and moderately improved?
The key to this particular land investment for me was that the path of the power line runs through the length of the property next to the road. Delivery of electricity to potential lots could be provided relatively cheaply. Access to electric power in remote vacant land can be expensive to get and you might need to explore some off-grid option to provide power. Here the power lines run along the road and are physically on the property. Another consideration is that we have already invested in farm equipment that can be deployed to help improve the land (e.g., tractor, bush hog, plow, rototiller, chain saw, brush cutter saw, wagon, etc..). Frankly the farming hasn't been much of a revenue generator for us so far which is ok because losses from the farm enterprise can be used to offset income in other areas to reduce income taxes. It is my hope that one way to get the farm to be financially sustainable will be to make improvements on this vacant land so people can live there. Last year we purchased the wild blueberry fields on the other side of the road. I hope to be able to spend time on this remote site managing wild lowbush blueberries and improving this 9 acre lot. That is my definition of a vacation.
One approach to land development on remote vacant land is to use Permaculture ideas and techniques. For example, sector mapping
involves figuring out how various energies move through your landscape: the path of the sun in summer and winter, the prevailing wind
directions in summer and winter, how water flows, how wildlife enters and leaves, where the fire danger is highest, where your vistas are located, etc. The idea is that mapping these flows so you understand them better will help you to optimize any design you eventually impose upon the landscape.
On Youtube, Oregon State University ECampus regularly publishes Permaculture videos as part of their online and offline Permaculture Design curriculum. In this video, Andrew Millison offers a great instructional video on how understanding the slope of your landscape can be used in the design of energy efficient and agriculturally productive settlements.
Hope this blog provides some insight into some of the challenges of remote vacant land investing. This type of real estate investing is not talked about as much as other types but it could be a good way to get people back on the land again. It can be a good investment under the right circumstances. Spending time in remote landscapes also helps to improve physical and mental health and gives you a sense of privacy and freedom that is hard to put a price tag on.
Accelerators in Silicon Valley is based upon CEO interviews, tours and startup meetings with 23 accelerators from Silicon Valley (which also includes accelerators based in San Francisco and one from Oakland). It is the author's belief that in order to replicate the Silicon Valley success story in the Netherlands and the EU, they will need to embrace a central feature of Silicon Valley, namely, the large number of accelerators located there. The 23 accelerators studied are a fraction of the accelerators one might find there. The author's access to accelerator CEO's was facilitated by his relationship with an influential VC who helped introduce him. His non-probability sample attempted to capture the range of accelerators one might encounter:
The sample I ended up with is a fair representation of the following six accelerator features: profit vs. not-for-profit, general vs. specific focus, taking equity vs. not-taking equity, large vs. small accelerators, offering workspace vs. virtual program, short vs. longer programs. ~ p. 33
This far into the book, I have three main takeaways.
The diversity of types of accelerators in Silicon Valley is really quite amazing. When I thought about accelerators in the past, I imagined them to be mostly similar. Perhaps if you are looking down from a high enough vantage point you mostly see the similarities, but as you get closer you start to see the large variety of accelerator types which are hinted at by the six features mentioned above. If you are looking to apply to a Silicon Valley accelerator, you would have to do your research to find the type of accelerator that would be the best fit for what you are doing. The book is a good resource for simply navigating the accelerator landscape in Silicon Valley.
The Data Is Not Yet In
Silicon Valley is the birthplace the largest internet companies around today. While that might be viewed as evidence that accelerators are having a big impact, Peter argues that the data is not yet fully in. What he know is that a huge number of startups are enrolled in accelerator programs and that some of them are successful. The accelerator industry is the most mature in the Silicon Valley industry but still is a relatively young industry and there is not alot of studies tracking how these accelerated startups are doing over the long term. Perhaps we need a cohort of non-accelerated startups to compare them against to see how many are surviving and thriving. For policy makers wondering if they need to help foster more accelerators similar to Silicon Valley accelerators the issue of tracking survivorship and success are critical to have answers to. I don't claim to be an expert on accelerators so there may be data out there since this book was published. My sense, however, is that we might see a third book from Peter in which he revisits some of the startups he encountered during his study. Given the diversity of types of accelerators, it may be a complex picture of what is considered a "success" and what types of accelerators might be producing the best results.
The essential difference between incubators and accelerators is difficult to identify. For some, they are two different ways of referring to the same thing. For others, they are different beasts altogether. Peter thinks the difference may be more evolutionary with the first generation incubators being more like shared work spaces, second generation adding some additional services to the mix, third generation adding some networking with funders, and the forth generation being accelerators that involve more mentoring, facilitating deals, cohort groups, and larger funding networks. One of the accelerators interviewed stopped accepting new startups and simply became an Angel startup fund. Life is not necessarily all roses for accelerators. They have problems that require them to adapt and evolve to survive.
So far, Accelerators in Silicon Valley has proven to be quite interesting and hopefully it will generate one or more blogs in the future as I get further into it.
Posted on February 13, 2019 @ 08:47:00 AM by Paul Meagher
The proposal for a Green New Deal is getting alot of discussion lately in part because it may become a centerpiece of the U.S. Democratic Party's 2020 election platform. According to Wikipedia, the original New Deal was "a series of programs, public work projects, financial reforms and regulations enacted by President Franklin D. Roosevelt in the United States between 1933 and 1936. It responded to needs for relief, reform and recovery from the Great Depression". The radical measures that were taken as part of the New Deal are often credited with helping the U.S. recover from the Great Depression. Many of those concerned with rising CO2 levels believe we need to enact a similar set of radical measures to avoid a climate catastrophe. The Green New Deal refers to the required set of radical measures that will help avoid that scenario.
The NY congresswoman Alexandria Ocasio-Cortez has posted a proposal on her 2018 campaign website called the Green New Deal that proposes setting up a working group to evaluate some specific technical measures such as:
Dramatically expand existing renewable power sources and deploy new production capacity with the goal of meeting 100% of national power demand through renewable sources;
Building a national, energy-efficient, “smart” grid;
Upgrading every residential and industrial building for state-of-the-art energy efficiency, comfort and safety;
Eliminating greenhouse gas emissions from the manufacturing, agricultural and other industries, including by investing in local-scale agriculture in communities across the country;
Eliminating greenhouse gas emissions from, repairing and improving transportation and other infrastructure, and upgrading water infrastructure to ensure universal access to clean water;
Funding massive investment in the drawdown of greenhouse gases;
Making “green” technology, industry, expertise, products and services a major export of the United States, with the aim of becoming the undisputed international leader in helping other countries transition to completely greenhouse gas neutral economies and bringing about a global Green New Deal.
Alexandria's proposed Green New Deal also includes a set of additional social justice measures which I'm a bit leery of because solving the CO2 problem is hard enough without trying to solve a host of socio-economic issues at the same time. Perhaps this is why Nancy Pelosi made this comment on Alexandria's latest Green New Deal resolution "The green dream or whatever they call it, nobody knows what it is, but they’re for it right?". It is difficult, however, to avoid the conclusion that climate change and social justice are linked problems so you might want to read the latest Green New Deal resolution for suggested social justice measures that might be included in a Green New Deal.
There is no widespread agreement yet on what measures the Green New Deal should include. Alexandria Ocasio-Cortez has offered up some suggestions but there are other suggestions and the discussion is just getting started.
Part of the reason why the original New Deal worked was because people were traumatized by the great depression and were ready to do something radical to get out of it. I doubt that people feel the same urgency for a Green New Deal. That sense of urgency, however, could change as CO2 levels continue to rise and exert their obvious and not-so-obvious consequences. I think it is important to start talking about what a Green New Deal might look like irrespective of what government is in power so that we at least have an emergency plan that might help us avoid or mitigate the potentially dire consequences of increasing CO2 levels.
Most of the suggested technical measures above are not radically new ideas. Most of us have probably heard something like them before. What is radical is the timeframe needed to agree on the New Green Deal measures and to get them done (less than 10 years). We need to make up for lost time so there is not alot of time available to debate a perfect set of measures. Radical action is needed more than radical ideas if a Green New Deal is going to happen. City councils in the coastal cities of Vancouver and Halifax have declared a climate emergency as a means of getting their own versions of the Green New Deal rolling at the city level.
The issue of how economic growth figures into a Green New Deal is the most perplexing and contested issue of them all. If the New Green Deal is sold on the basis of increasing GDP growth then it will have avoided the root cause of why a New Green Deal is needed (i.e., increases in CO2 levels are tightly linked to GDP growth so cannot be part of the solution). A growth oriented Green New Deal will not be radical enough to truly address root causes.
At the end of the day it is not the government alone that is going to solve this problem. There will be a major role for the entrepreneurs who devise new ways of solving problems that are less resource intensive. There will also be a major role for investors who help finance these new ways, who are anticipating the opportunities that a Green New Deal might offer. There will also be a major role for new ways of organizing ourselves for collective action. In some cases, such as the REKO Circles discussed in my last blog, you don't need investors or government to take the radical step of enabling a local food system. You just need to get organized.
Posted on February 4, 2019 @ 07:16:00 AM by Paul Meagher
Most people in North America have never heard of a food retail innovation called REKO Circles (REKO is a Swedish abbreviation for "Fair Consumption"). Judging by its uptake in Finland and Sweden, expect to hear more about REKO Circles coming to a place near you.
Basically, members of a REKO Circle join a closed Facebook group (or similar social networking platform). Producers post what they have to sell and consumers add comments saying how much they would like to buy. A time and place is set where producers and consumers will congregate and exchange goods. Usually it is a parking lot. There are no booths or advertising, goods are simply provided to the customers in the amounts requested from the back of their vehicle to the consumers. Everybody leaves on their merry way within an hour of the first arrival.
There are many advantages for local producers and consumers in this arrangement. Local producers who are not big enough to sell to the local
grocery store now have a market. There are no monetary costs for producers or consumers to network online to buy and sell agricultural products. The producer gets more of the money from selling their product than they would if they sold to the grocery store, even at prices competitive with the grocery store. The consumer knows where their food comes from. Consumers can get a significant portion of their weekly food needs met in one place. Producers only bring what is necessary and don't have to transport unsold items back to their home.
REKO Circles may be acknowledged and promoted by municipalities and governments, but REKO Circles to date have generally been organized in a bottom
up fashion though people organizing on social media for the purposes of setting up a local food network.
Below are a few resources that I would recommend to learn more about REKO.
REKO Circles were initiated in Finland in 2013 by a farmer Thomas Snellman. Since then they have grown to become a significant
component of the food retail network in Finland (5% or more). Thomas Snellman gave a TED talk that is worth watching to get the concept from
I originally learned about REKO on Richard Perkin's Youtube Channel where he has been an enthusiastic supporter of this particular method of selling his goods. Richard gives you a good nut-and-bolts view on how REKO works on Richard and Yohanna's farm:
Even though I was familiar with the REKO concept from Richard's channel, I didn't fully appreciate its history or its disruptive potential until I read the paper Farm Fresh in the City: Urban Grassroots Food Distribution Networks in Finland (S.E. Hagolani-Albov and S.J. Halvorson) which can be found in the Global Urban Agriculture (2017) collection of papers edited by
A. WinklerPrins. This chapter is one of the few academic treatments of the REKO concept and does an excellent job in explaining what is different about REKO and why it works in the Finnish context.
Will REKO Circles work in the North American context? That awaits to be seen. You don't need startup capital or the blessing of government to launch a REKO Circle near you.
Posted on January 29, 2019 @ 07:30:00 AM by Paul Meagher
Last friday I purchased a lawn tractor. I already have a lawn tractor so why did I buy another one? Here are some of the reasons:
If one of them fails, I have a backup.
On certain tasks, I can double my productivity (e.g., time to mow in the lawn/garden/vineyard/orchard).
The lawn tractor is not identical to the first so offers additional versatility in performing certain tasks.
The second lawn tractor has a smaller deck width (42 inches versus 52 inches) so might be better at maneuvering
around lawn/garden obstacles.
Last but not least, I got a good deal on it.
The point of mentioning this is to highlight the fact that there are many reasons to build redundancy into your business. That redundancy can come at a cost, not only the acquisition cost, but also the costs of maintenance and storage. Building redundancy should not be done lightly but it should definitely be a consideration when formulating a business plan that lasts beyond 1 year. Once you start experiencing breakdowns, or how long certain tasks take with one machine, or the limitations of the particular machine you purchased, the need for redundancy becomes more obvious.
Redundancy doesn't stop at just acquiring 2 machines. I buy the cheapest Stihl string trimmers I can buy because I don't want to carry around a heavy machine and these work fine for the intended purpose. When they are worked hard they run out of gas, they run out of trimmer line, and the head will wear out. If you want to keep working when these things happen it is nice to have 2 string trimmers. If you have other workers helping you, then you may have to double up on the machines for them as well, although you can also rationalize the redundacy in terms of allowing for 3 string trimmer operators with 1 backup for all the
When you are engaged in a task that determines how much income you will generate, your main limitation may be that you do not have enough revenue generating machines. For example, if you have lots of berries and you want to make jam for sale, you might run into the limitation that your jam making machine can only produce J units per hour. If you had 2 jam makers, you could potentially make 2 x J units per hour. One mistake a person might make is to assume that if you keep buying jam makers your profits will keep going up accordingly. In my experience a person can only operate so many small scale jam makers at one time (2 is the current limit if you are also canning) so the longer term solution may not be to buy x more of the same units but rather to buy an industrial jam maker with a larger capacity or figure out a DIY solution.
The purpose of this blog is to highlight the importance of building redundancy into your business planning. In this age where we are supposed to be consuming less, promoting the acquisition of more is
often not good advice. I am not suggesting that we double up on everything we use in our businesses, but to be judicious and decide which parts of your business would benefit from redundancy and how much. Also, in this age where we are supposed to be as operationally lean as possible it is worth pointing out that there are costs to being too operationally lean if you are ignoring the need for some necessary redundancy.
Posted on January 18, 2019 @ 09:37:00 AM by Paul Meagher
Over the last few days as the temperatures have gotten colder, I noticed that the river has become more iced over. There is a particular pattern to how ice forms on the surface of a free flowing river. Ice moves in from the sides and begins on sections of the river with gentler slopes. There is probably a positive feedback cycle as ice begets more ice. It appears that sections of the river that have the most momentum are the last to freeze.
In physics, we use the equation P = M x V to define what momentum is. Momentum P varies as a function the Mass M of the volume and the Velocity V of the volume.
When studying stream behavior it is important to study it under frigid conditions because cold has a major influence on the mass M and velocity V of water in a steam channel. For details, see the classic Determination of stream flow during the frozen season (PDF) by Burrows & Horton.
The concept of momentum gets applied to business in many ways. For the metaphor to make sense in these contexts it should behave in a manner similar to the defining equation.
To increase the momentum P in a business requires increasing the Mass, the Velocity or Both at the same time.
Businesses such as Facebook have alot of momentum. In the early days the increased momentum came more from the rate of new users joining the platform, the Velocity component V. As Facebook has
matured, the momentum is coming more from the shear size of the platform, the Mass component M.
How does a business achieve momentum?
Sigmanow offers several suggestions for how to achieve momentum. I like the simple example of adding one new sales person a month to your business. Ideally, this strategy would have the effect of increasing the velocity and mass of sales on a month by month basis. It might be one of the most potent strategies for achieving high levels of momentum quickly. Of course, if you can't deliver on the orders then in the big picture the momentum of the business is alot less than order volume would suggest.
There are lots of other strategies for increasing business momentum that you can find by googling "business momentum". I'm not convinced in many instances that the suggestions would actually lead to an increase
in business momentum - they seems like motivational prescriptions with no strong connection to improving business momentum.
Momentum features very prominently in day trading strategies and there are lots of metrics for measuring momentum. If you are looking for momentum metrics studying momentum indicators used in day trading might be useful. The fundamental equation for momentum for day traders looks like this:
M = V - Vx
Where V is the latest price, and Vx is the closing price x number of days ago.
Posted on January 11, 2019 @ 08:02:00 AM by Paul Meagher
My main resolution this year is to become more organized. With this goal in mind, I started to sort my farm receipts for the last 4 months (Sept to Dec 2018). So far, the setup below is what works for me:
Shown here are 4 open legal folders on the couch, one folder for each of the last 4 months of 2018.
I also cut strips of paper, folded them in half, and labelled one side with a
label for the type of receipt that goes there:
CCA purchases (purchase over $500)
License & Registration Fees
I don't have to create the same number of category strips for each folder, just the ones that are necessitated by the types of receipts I
encounter for that month.
I initially thought I would use the 3 slot trays to sort my receipts into the proper month. After sorting receipts by month I would then sort them into the proper category. You can see a three slot tray on the coffee table and on the sofa that I was using for this purpose. It turned out there are some inefficiencies with this approach. As I was placing receipts into the proper monthly slots, I found myself not wanting to mix them together. Instead, I wanted to put frequently occurring gas receipts together in a pile separate from other receipts so I wouldn't have to sort through them again. I also noticed that small tool purchases were popular and that it would be efficient to separate them out as well. I then started examining receipts in more detail and decided that I only want to do this sorting decision once. So I stopped presorting receipts into the monthly slots and am placing them directly into the appropriate monthly folder with receipts of the same type wrapped in a strip of paper with a category label on it. There are also a few miscellaneous folders for special transactions like a land purchase, vehicle and house insurance, and utility statements.
This example illustrates a fundamental principle of Lean Bookkeeping - that you should handle receipts as few times as possible.
Receipts are like a split piece of wood. If you have a wood stove you are probably aware of all the handling that you have to do on a piece of wood before you insert it into your wood stove. Lean Woodburning involves reducing the amount of wood handling as much as you can. For example, last summer I got split fire wood for the farm from a local supplier so my wood handling began with carrying it from the back of the suppliers half ton truck into my wood shed where I piled it into rows. This is an improvement over previous years when split wood was dumped outside the front door of the shed. I had to throw or wheelbarrow wood from the pile into the shed and from there handled it again to pile it. I also didn't have the lawn damage and mess that dumping wood causes.
In previous years, I took wood to the house by carrying arm loads of wood from the wood shed to the kitchen and placing them into a wood storage box beside the stove. This year I got lazy and loaded the wood onto a Costco dolly and leave the wood laden dolly in an inclined position beside the wood stove. I'm saving myself the work of unloading the wood, the weight of carrying it, and only need to make one trip to have a good wood supply in the house. The dolly beside the stove is not winning any awards for beauty but it works for me when I'm at the farm in colder weather.
Any receipts we generate are like a piece of split wood and alot of my disorganization around receipts comes from handling them too many
times. I still have to transcribe receipt amounts into a digital format so there is more handling to come and more ways to lean my bookkeeping process. It would be nice if I was sufficiently organized that I digitized my receipts right away, but it is what it is and you have to start somewhere.
Posted on December 19, 2018 @ 09:05:00 AM by Paul Meagher
In my last blog Business Asset Accumulation I discussed the importance of business asset accumulation to starting and growing a business. In today's blog I want to dive a little deeper into what a business asset is from an accounting point of view and an investment point of view.
Assets are sometimes defined as resources or things of value that are owned by a company. Some examples of assets which are obvious and will be reported on a company's balance sheet include: cash, accounts receivable, inventory, investments, land, buildings, and equipment.
One of the exercises that you typically engage in when creating a business plan is taking an inventory of all the business assets you currently own. If they are personal assets and will not be used in the business then they shouldn't be considered an asset for the purposes of your business plan. We can refine our thinking about assets by using the standard accounting categories to classify the type of asset the business owns. Does the identified asset fall into the cash, accounts receivable, inventory, investments, land, buildings, or equipment category of asset?
A business asset is a piece of property or equipment purchased exclusively or primarily for business use. There are many different categories of assets including current and non-current, short-term and long-term, operating and capitalized, and tangible and intangible. Business assets are itemized and valued on the balance sheet, which can be found in the company's annual report. Business assets are listed on the balance sheet at historical cost and not market value.
For the purposes of accounting we have a common way to breakdown assets (i.e., cash, accounts receivable, inventory, investments, land, buildings, and equipment). For the purposes of investing we have another common way we might want to breakdown assets (i.e., current and non-current, short-term and long-term, operating and capitalized, and tangible and intangible).
The Investopedia article claims:
The management of business assets is arguably one of the most important jobs of company management.
In summary, this blog delved a bit deeper into the topic of what an asset is. Accountants and investors have some common distinctions they use to further classify the asset into a particular class of assets. When you are creating a business plan and you are thinking about what types of assets the business has going forward, you might use these distinctions to help remind you of the different types of assets that businesses often report.
One last distinction I would make is between potential and proven assets. Startups may acquire business assets with the idea of eventually using those assets in the startup business. Until those assets are tested for the intended purpose they are only potential assets. An example would be a water dispenser I purchased many months ago thinking I might use it to transfer wine from carboys into bottles (or another carboy). Recently I needed to bottle some wild blueberry wine that was already filtered and decided I would try using it to bottle the wine. It worked good for the first few bottles and then my concern became whether it could actually transfer the full carboy on a single charge (it has a USB plug to recharge the battery). It did and it only took around 20 minutes to recharge. I was pleasantly surprised at how well this gadget worked. It now goes into the "proven asset" category and I would feel comfortable purchasing a few more of these proven assets (just ordered 2 more) for my mini-winery startup.
Posted on December 13, 2018 @ 11:13:00 AM by Paul Meagher
One way to start a business is to begin accumulating the assets you will need to start that business. Those looking to get into farming, for example, might accumulate a tractor, some old farming equipment and any good cheap acreage they can get their hands on.
When we use the term "startup" we might think there is a specific point in time when that startup was conceived or launched. Sometimes a
startup is what happens after an extended period of business asset accumulation.
If you wanted to someday start a hair salon, and you have the storage space, you might spend alot of your spare time searching for deals on
a building, chairs, mirrors, lights, and products that you might eventually need to "start" that business. You are arguably starting the business already if you are accumulating the assets you will need to start it, but it may not feel like that. We expect some official opening to happen to make the startup seem real.
If you accumulate alot of useful assets prior to starting a company, that can help you get the further funding you might need to ditch your
current job and start your new business. Business asset accumulation demonstrates seriousness, it reduces your launch cost, it can help secure the investment (reduce investor risk) and it means less of your operating income will need to be used to pay down debt that you might have incurred if you didn't accumulate these business assets.
There are many ways to start a business. Asset accumulation is an often used approach. Probably more important in situations where goods and services are physically produced and/or sold. Business assets, however, can include intangibles such as patents, copyrights, team composition, letters of intent, permits and useful know how.
Hobbies can often be turned into businesses because of asset accumulation. My photography hobby resulted in me purchasing more photography assets to get better at my hobby. There are many more assets I could be purchasing if I thought I might ever want to turn this into a paying gig. Some of these asset purchases might come over time without an explicit intention to make money from my hobby; nevertheless, these accumulated assets bring me closer to being able to offer a paying service to people and would involve fewer startup costs to fully launch.
Asset accumulation also signals to investors that you have "skin in the game". Investors like to see that an entrepreneur has sufficient confidence in their venture that they have invested some of their own capital into getting it started. Not just time, but actual money.
Posted on December 10, 2018 @ 10:04:00 AM by Paul Meagher
For a few years now I've used a Canon SX50 camera to take all my photographs and videos. It featured a powerful zoom lens and 12 megapixel resolution. I liked the fact that I could zoom in and take pictures and videos with one hand. It was like having binoculars built into your camera and sometimes I just used it as binoculars. I still like that camera. I nevertheless wanted see if I could improve my photographs and videos by buying a new Canon Rebel SL2 camera. It requires more skill and I need to use 2 hands to operate it so I'm still on a learning curve. I captured a couple of nice landscape photos with the SL2 that I thought I would share.
I'm standing on a strip of land and a bridge that separates both sides of this body of water. The first photo is of the estuary where fresh water from the hills meets salt water from the ocean.
The second photo is where the navigable harbor starts and there is a wind sailing club that calls this section of the harbor home. I like taking photos near sunset and the camera seems to perform better than my old one under low light conditions. It was a calm evening so the glassy water threw off some nice reflections.
I recently looked at a book of nature photography from the late 70's or early 80's. The photographers were winning awards but the photography looked very coarse because the photos had such poor resolution. It was hard to appreciate the beauty of the scenery because the picture quality was so poor compared to today's standards. You had to be pretty dedicated to engage in the hobby of photography back then and the results often weren't that great (by today's standards). Perhaps I need to appreciate it as retro or vintage photography but that was a stretch for me at least.
In these days of needing to maintain a YouTube or Social Media presence it is easy to justify these camera upgrades as business expenses rather than hobby expenses.
Posted on December 1, 2018 @ 03:27:00 PM by Paul Meagher
Yesterday I picked up a couple of thin books on creating business plans. I am hoping this will motivate me and remind me of of the elements to include in my farm business plan. I intend to do most of the plan write up in December. I think December is a great month for business planning as January 1, 2019 is a natural choice to start implementing a business plan. December often marks the end of of fiscal year for tax reporting purposes and you can be starting to figure out what you earned and spent in the last year and use that to help in your planning.
The plan that I am developing with my wife will map out what we will do in the next 3 years to establish an estate winery operation on our farm (where wine is produced and sold on the farm). We have been gearing up for this by planting grape vines for the last few years, but to date we haven't created a formal business plan for how we expect this venture to unfold in the next 3 years.
Often you will need to create a business plan to obtain financing as the funder needs some idea of what you hope to accomplish, when, how much it will cost, how you will promote it, and what you expect to earn as profit. In our case, we need to formulate a business plan as part of a winery registration process. Funding and registrations are popular reasons for needing a business plan.
One element of a farm business plan that you might not see included in other types of plans is a section labelled "Holistic Context". Here the decision makers agree on a set of statements about values and constraints that they need or wish to operate under. Stating your holistic context explicitly can serve to setup valuable constraints on how the rest of your business plan will be formulated. Holistic context statements help to ensure that your plan is realistic with respect to values and the constraints of capital, time, machinery, etc... that the partners have to dedicate to the venture.
If traveling each year, for example, is really important to the partners, and this is included as one of your holistic context statements, then that constraint makes it harder to raise animals that might require 24 hour care 365 days a year. The farm owners state their holistic context so that they don't run into conflict in their business planning and how they run the operation. I wouldn't necessarily include an holistic context section in a business plan that I would be presenting for funding, but in the context of a registration process I think it makes more sense to do.
You can learn about how to formulate Holistic Context statements in
How To Write A Holistic Context: A Step By Step Guide. Ridgedale Permaculture provides an example of a well fleshed out set of Holistic Context statements (scroll down the page to view them). To be honest, I wasn't very by-the-book in coming up with my holistic context statements. I viewed the excise of coming up with some holistic context statements as a useful way of identifying constraints on how the business plan should be put together; otherwise, it is too open ended and only guided by what is good for the business. That can lead to an unrealistic plan for the owners if it doesn't match their holistic context.
The purpose of this blog is to remind entrepreneurs that December is often a good month to write business plans that go into effect
January 1, 2019. I also wanted to share with you the idea of starting the business planning process by formulating Holistic Context statements. These statements can serve to make writing the rest of your business plan easier because they provide useful constraints on your overall business planning and your write up. If your plan only makes sense relative to your Holistic Context statements, then it might be useful to include it as a section of your business plan.
Posted on November 30, 2018 @ 10:39:00 AM by Paul Meagher
A Turkish investor by the name of Abdul Latif Jameel is not a registered investor on our network. There have been 2 reports of him contacting entrepreneurs to discuss investing in their projects. We believe that he is googling public info in entrepreneur proposal summaries to eventually get into contact with them.
Here is his company and contact info:
Abdul Latif Jameel
President: ALJ Yatirim Holdings
The content of the website at aljyatirim.com is taken from another website. The owners of the real website have stated:
Our official website is this https://www.globalyatirim.com.tr/en/, as also stated on the kap.org.tr (Public Disclosure Platform), which is run by MKK (Central Securities Depository for Capital Market Instruments in Turkey). Information as to our board members is also available at: https://www.kap.org.tr/en/sirket-bilgileri/genel/967-global-yatirim-holding-a-s
We have been informed by other third parties as well that they have been contacted by an “ALJ Investment Holdings”, whereby “ALJ Investment Holdings” referred those third parties to aljyatirim.com, the whole content of which seems to have been copied directly from our official website.
Once the information on aljyatirim.com is reviewed, it can be seen that:
Our management and subsidiary information has been altered and copied
Our company name “Global” is on the picture on the main page
There is no phone details and half an address in order not to be searched online.
Our legal team is currently working on the matter, and we would recommend against continuing the communication that you have been receiving.
Anytime you as an entrepreneur are contacted by an investor claiming to be registered on our website, you can use their registered email address to do a status lookup using the Investor Verification tool in the entrepreneur login area. If that lookup fails to verify them as a registered investor, then please report them to us and discontinue communication until we have had a chance to look into the situation. We have had 2 reports so far of Abdul Latif Jameel contacting entrepreneurs for the supposed purpose of investing so we are publicly issuing a warning not to deal with him because he is 1) not a registered investor, and 2) is assuming the identity of another company.
One idea I had recently for how more plastic could be recycled is if there was a way to cheaply convert, say, plastic grocery bags into feedstock for a 3D Printer. If the 3D printed object can be taken back and used to create new 3D objects, then we would have some circular economics happening for plastic products and plastic packaging.
Posted on September 22, 2018 @ 07:30:00 AM by Paul Meagher
The image of the lean startup is often associated with spending as little as possible to verify your business model. The entrepreneur is living on ramen noodles, making a series of low cost minimal viable products and getting it out in front of potential customers to find out if they are on the right track. Eventually the entrepreneur reaches a moment when they can take on investment because they have reached a proof of concept and now need to scale. This type of business evolution is more likely to happen in the tech world because of the relatively low cost of entry.
Problems arise when we take this startup approach into a nonlean industry. A nonlean industry is one that is heavily regulated and which may require a high level of expenditure before you can even get started. You may need expensive licensing, meet standards that are costly to achieve, buy real estate, build structures, do extensive renovations, etc...
You can't do all these things on a shoestring budget.
Take for example the production of wine. To make a good bottle of wine you can make it with inexpensive plastic pails and glass carboys. To be able to get into the marketplace with your wine is not so easy. There are many regulations and standards that you have to meet before you may do so, even though you may be in possession of a product that a customer would like. In a nonlean industry startups need to raise significant startup capital to deal with regulatory compliance and other costs of doing business before they can even begin to do business. The legal cannabis industry, for example, is a nonlean industry as there are high regulatory compliance costs to doing business in that industry. This is offset by the potentially high reward factor, as it is in any nonlean industry.
Vegetable farming is an example of an industry where you can startup in a relatively lean manner and become even leaner over time. You can start simple but in time your lean operation can become heavily invested in efficiency improving tools and systems like this one:
In conclusion, the lean startup movement has a tremendous amount going for it but the image of starting a business on a shoe string budget is not applicable to some industries where other factors (fund raising success, compliance, networking) may have more importance in determining whether you can create a startup in that market.
Posted on September 5, 2018 @ 12:27:00 PM by Paul Meagher
When companies say they want to "scale up" their existing business, we might ask them to be more precise. If they want to double their business, then that would be a 2x scaling factor. If they they wanted to increase revenues from 1 million to 10 million then that would be a 10x scaling factor for revenues
On Youtube, one of the channels I like to watch is Stefan Sobkowiak's channel. He has a unique take on Permaculture orcharding and life in general. In the video below Stephan talks about a 10x scaling pattern for planting an orchard that involves planting 1/2 an acre, then scaling up to 5 acres (10x), and then scaling up to 50 acres (10x), etc... His discussion of this planting pattern takes place early in the video.
I am discussing this planting pattern because it provides an interesting example of how one might go about scaling up an enterprise. The number 10x was recommended by Stephen if you want to get serious about orcharding. That seems a bit extreme in general, but it is helpful to be as precise as you can be about how much you want to scale up your business.
It is also useful to imagine what you would need to do in order to achieve 10x growth. Perhaps you limit yourself to only imagining what it would take to achieve 2x growth - tweak this, tweak that. You can't tweak your way to 10x growth - some more fundamental changes will be required. These are often points at which a promising venture seeks additional funding (Series A, B, C, etc...).
Posted on August 16, 2018 @ 06:38:00 AM by Paul Meagher
One aspect of driving that I do not like is switching between low beam and high beam light. As a vehicle approaches I can't remember what state my beams were in and the indicator is obscured by the top of my steering wheel. I have to quickly duck my head down to see what the indicator says and then adjust the light beam intensity or not. I don't like taking my eyes off the road when vehicles are close so this is a significant safety issue as well.
Companies developing driverless cars must have figured this out by now? I would love to have a vehicle where I could activate automatic
control of light beam intensity. I suspect that this is already out there somewhere now but I don't research new vehicle technology enough
to know. I did some googling and came across a recent research paper Intelligent Automatic High Beam Light Controller (2018) that proposes a simple, low cost solution:
In order to make the driving at night time a safe experience and more friendly to the other drivers on the road an automatic high beam light controller is needed. This paper presents, a simple, low cost and easy to install, design for an intelligent automatic on/off high beam light controller. The proposed design was implemented using the required hardware and components. The experimental results show that the controller provides the driver with the required automatic control; by turning on and off the high beam light when facing other drivers. Moreover, the system will turn off the high beam light if there is enough lighting on the surrounding environment such as when driving inside cities.
This automatic high beam light controller example illustrates the point that I would like to make about the future of driverless cars. Instead of
expecting driverless cars to arrive on the scene some year in the future in all the new car models, I would suggest that the companies developing
driverless car technology are going to need to figure out how to modularize the different technologies involved (such as automatic high beam light control) and to gradually incorporate these modules into new car models. In other words, there will be a gradual transition to
driverless cars with new car models offering one or more modules that assume control of some aspect of driving such as high beam control.
Another feature might be to automatically stay between the median line and side of the road. It might not be available under low light conditions unless you have the high beam control module.
We often take for granted all the abilities that are required in performing a complex act like driving. The car industry might eventually agree
upon what the list of component abilities are and strive to make their component modules interchangable or reusable across car platforms.
In my opinion, what is interesting about companies developing driverless car technology may not be so much the end game - the fully automated driveless car. Rather, it is the component technologies they are developing and how those component technologies will be gradually released in new car models. I would argue that the roadmap of driverless car technology is to develop modules that automate different aspects of driving, not to fully automate driving in some high tech car of the future.