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Accounting Adventures [Management
Posted on April 29, 2017 @ 07:34:00 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.


Banish Waste [Management
Posted on January 27, 2017 @ 10:26:00 AM by Paul Meagher

Lately I've been blogging about Eric Ries' book The Lean Startup (2011). Before there was the lean startup there was a large literature dedicated to lean manufacturing, lean production, lean thinking, agile development, etc... The lean startup concept did not materialize out of thin air and to properly frame the lean startup concept it is important to understand some of the history behind lean ideas and techniques.

One of the books most responsible for introducing and popularizing lean ideas and techniques is the book by James Womack and Daniel T. Jones called Lean Thinking: Banish Waste and Create Wealth in Your Corporation which was originally published in 1996 but the version I am consulting is the revised and updated 2003 edition. One of the reasons the book was popular and influential is because it documented the Toyota Production System practices that the Japanese automaker used to achieve incredible success in a short period of time. Toyota was also becoming a dominant force in the industry around the time they first published the book. This lent alot of credibility to the ideas then and continues to do so today.

Another reason the book was popular is because it focused upon the thinking behind lean production practices and not just the practices themselves. In today's blog I want to quote the opening paragraph of that book on the definition of the Japanese word "muda" because I think it is important to understanding the primary motivation behind the lean startup approach - to banish waste:

Muda. It's the one word of Japanese you really must know. It sounds awful as it rolls off your tongue and it should, because muda means "waste," specifically any activity which absorbs resources but creates no value: mistakes which require rectification, production of items no one wants so that inventories and remaindered goods pile up, processing steps which aren't actually needed, movement of employees and transport of goods from one place to another without any purpose, groups of people in a downstream activity waiting around waiting because an upstream activity has not delivered on time, and goods and services which don't meet the needs of the customer. ~ p. 15.

According to the authors, the antidote to muda is lean thinking. Lean thinking is first and foremost about banishing waste or muda. Where Eric's book fits into the literature on lean thinking is that he was the first to define in some detail how lean thinking can be applied to startups so that startups don't waste alot of energy doing stuff that just ends up being wasted effort. The term lean often conjures up associations with being light and agile and fast. The idea of banishing waste is probably not the main association but it should be because that is the justification for why the lean startup approach is considered useful.

In my last blog on Experimentation I didn't discuss the muda concept but it is important to keep in mind because experimentation done wrong is just another form of muda for the startup. The purpose of experimentation is to make sure the startup vision is on track before you go too far down the road in believing your startup vision. Spending alot of time on a business plan for an innovative product or service is muda because it often does not survive contact with the first customer.

Lean startup proponents advocate the use of scientific methods to test the startup value and growth hypothesis. One might think this is being done in an effort to arrive at the truth or validated learning, but the prime motivation is to try to avoid as much muda as possible during the startup process. This is how lean principles are justified and it is why we can agree on them. It is easier to agree on what muda is than what the truth is.


Customer Quality [Management
Posted on August 11, 2016 @ 06:14:00 AM by Paul Meagher

Yesterday I caught up on a few Urban Farmer podcasts at Permaculture Voices. I found the podcast All Customers ARE NOT worth Selling To, An In-Depth Look at High Maintenance versus Low Maintenance Customers particularly interesting and useful. One of the main ideas discussed in this podcast is the idea that not all customers are the same, some are better to have than others. The main type of customer to watch out for is the low volume, high maintenance customer; a customer that requires alot of management but who is only providing a small volume of business. These can sink your business. Alternatively, the low maintenance, high volume customer is the best type of customer to have. You often do not get these customers overnight but attain them over time as you gain trust and rapport.

Customers come in all shapes and sizes and have their unique personalities; however, from a business point of view, maintenance and volume are important dimensions that you might use to guage customer quality. The table below grades customers according to where they fit on these dimensions.

Table 1 - Customer Quality


I encourage you to listen to the podcast to see how Curtis and Diego flesh out this table. They mention several times the concept of "firing" the customer because they fall into the Bad quadrant of this table. This contrasts with the messaging one might hear that the customer is always right. If you rigidly believe that, you may not be in business long, or you will be strugging, if too many of those customers are high maintenance and low volume.


Scouting Skills [Management
Posted on August 9, 2016 @ 06:32:00 AM by Paul Meagher

Yesterday I noticed some tent caterpillar nests in an apple tree by my house. I cut the branch it was on out and stomped on the nest. I didn't think too much of this discovery at the time.

Later in the day I was working in a back field and decided to take a ride in my tractor along the edge of the field. I examined some wild apple trees on the border of the field and noticed that the same tent caterpillar nests were on some of those apple trees as well.

After seeing a few nests I returned to my barn, picked up some pruning tools, and returned to deal with the threat - cutting out the branches they inhabited and stomping them. Hopefully this will help to limit the population of these caterpillars which will defoliate an apple tree quickly once they escape the caccoon-like tent they grow up in.

Scouting for threats is not something I think about doing often enough. Today I was simply lucky to notice this potential issue and it was because I was going for a joyride around the edge of a field in my old tractor that it happened. I am coming to the view that scouting is too important to be left to chance and that I should be more systematic in deciding when and where I will scout for threats in the future.

You can also scout for wild food resources as well so scouting can be done both to detect threats and, more positively, to find resources. The effectiveness of scouting can be improved by being more systematic about how, when and where you investigate although there is always some element of chance to what you might encounter as you wander about.

Is scouting a useful skill to develop for your business? Should you take time to simply to explore around to see what threats or resources are out there? Should you be more systematic in how you scout for threats or resources in your business environment? I don't have alot of answers this early in my thinking about scouting but I do know that scouting is not just nice, it is necessary to keep ahead of the threats and to find food resources. Optimal Foraging Theory provides some guidance for thinking about scouting even though it appears to be mostly focused on food foraging. It has been extended to information foraging behavior as well. You can't spend all your time exploiting your current food patch, you also have to spend some time discovering where your next food patch might be. To do this effectively, you need to develop some scouting skills to detect the next patch effectively.


Getting Organized [Management
Posted on July 25, 2016 @ 09:03:00 AM by Paul Meagher

This is the toolkit I haul around with me from vine to vine in my small vineyard as I do pruning work and some minor trellis maintenance work.

The 7 items in the green grocery carrier that I use to hold my tools are:

  1. Felco #2 Pruner
  2. Tape gun (also known as a tapener gun) for tying vines to the trellis
  3. 7 inch multipurpose plastic ties also for tying vines the trellis (more heavy duty tie than the tape gun)
  4. Multipurpose fencing tool
  5. Couple of short pieces of fencing wire (for tightening the trellis wire)
  6. Two wire joining and tensioning spools
  7. Fencing staples (use wooden posts for my trellis)
  8. A pair of gloves.

It takes awhile to figure out what tools are most useful and worth carrying around with you. My wife carries around a small trolly so she can put pruned material from the vines into it. She also carries gloves, Felco #2 pruners, a water bottle, insect repellent, and some sunscreen. We all carry around the set of tools that are right for us and for the job as we define it.

I spent some time yesterday thinking about how I could organize my vineyard tools more efficiently. I have more vineyard tools and materials than are shown in the green bin above and I was wondering how I might organize those tools as well. I have a small arts-and-crafts toolbox that I decided would be a good storage for my "core helper" tools. The "core helper" tools consist of replacement parts for the tape gun as well as long nose pliers to remove and insert the tape gun blades if need be. It also includes extra wire tensioners and extra plastic ties if I need them. This blue box can physically sit inside the green box I use for my core tools.

You'll also notice that I have an even bigger sturdy grey container for some bulkier vineyard tools and materials (e.g., gold-colored wire tensioning tool, wire spools, string trimmer line, wedges, a maul, etc...). This might be considered my "core extension" toolkit. The three toolkits can nest inside each other as illustrated in the photo above. If I filled the core extension toolkit with a gas jug for my string trimmer and more trellsing tools, I wouldn't try to nest the toolboxes; however, it is interesting to note that the toolkits can be physically nested within each other and, in one armload, I can load most of the vineyard tools I might need into my truck and take them to where I will be doing vineyard work. By organizing my tools in this way I don't have to make as many decisions about which tools I will need for jobs in the vineyard.

It pays to spend some time getting yourself organized so you don't have to spend alot of time in search mode looking for the tools you need to complete a job. If you find yourself spending alot of time in search mode getting ready for a job, perhaps you need to spend some time getting organized.

This blog was inspired in part by my own organizing efforts and also by former Wired editor Kevin Kelly whose Cool Tools blog is worth checking out. In particular, check the postings on the topic of What's In My Bag which was an inspiration for this blog.


Measuring Autonomy in Self-Driving Cars and People [Management
Posted on May 11, 2016 @ 09:25:00 AM by Paul Meagher

I was browsing a recent article by NVIDIA researchers called End to End Learning for Self-Driving Cars and was intrigued by the simple metric they were using to evaluate the performance of their self-driving algorithm. The metric is called "Autonomy" and is based upon measuring how much time the driver spends intervening to correct driving performance over a given amount of driving time. "Autonomy" is measured with the following simple formula:

Autonomy = ( 1 - Intervention Duration/Task Duration ) * 100

The inverse of the "Autonomy" score might be called the "Helping" score.

So perhaps in self-driving vehicles in the future they will be rated by their degree of autonomy or perhaps they will operate like an advanced form of cruise control where we have to potentially intervene every so often and, as such, we will want to keep track of our vehicles current autonomy score. Maybe on icy roads the autonomy score goes way down but driving through the prairies on a nice day it is at 100% like it is in this screenshot of the NVIDIA dashboard.

Autonomy in the workplace is measured by researchers in terms of a worker's freedom to schedule and choose their work. Not surprisingly, they have discovered that workers with more autonomy have more job satisfaction. Personally, I would be more interested in measuring worker autonomy in the way that they measure autonomy in self-driving cars so that we might have answers to questions about the variance in worker autonomy as a function of various factors (e.g., individual differences, time on job, type of work, autonomy scores in the past, etc...). Likewise, we might study child development using an autonomy metric like this. Take a task and ask your kids to do it and, depending on age or other factors, you might find yourself intervening to help with such frequency and duration that you wonder why you asked them to help you in the first place. Other kids might prefer to try it themselves and don't ask for much help. Are there individual differences in preferences for working autonomously? Does it correlate with measures of introversion/extroversion?

I think these self-driving car researchers are onto something with this autonomy score. It offers a nice simple formula we can use to reason about an important aspect of worker performance; namely, the amount of intervention that is required to help them carry out a work assignment.

Incidentally, you might wonder why graphics chip manufacturer NVIDIA is doing research on self-driving cars. The popular "deep learning" technique they are using for their algorithm relies critically on the parallel processing that Graphics Processing Units (GPU's) provide. The popularity of deep learning is good news for NVIDIA and it looks like they are not content to just manufacture more hardware for deep learning algorithms but also want to play a role designing some of the deep learning algorithms that will run on their chips. Deep learning algorithms harness the power of many GPUs which NVIDIA has no shortage of.


Importance of Regular Maintenance [Management
Posted on July 14, 2015 @ 09:17:00 PM by Paul Meagher

On Monday I was working with my brother to replace some windows in a mobile trailer that is on a farm property me and my wife own.

This is what the replaced windows look like (notice the rot on the bottom of the window).

David Holmgren talks about the importance of maintence in the context of the Produce No Waste principle. He provides this useful diagram to show how function decays over time as a result of no maintenance, regular maintenance, or delayed maintenance.

I've been negligent in doing regular maintenance work on the mobile trailer property and am now paying the price. Problems that would have been smaller had I been doing regular maintenance (e.g., paint windows) are now bigger problems (e.g., replace windows). A door that was not replaced in time meant I had to rip up some flooring around the door and replace it as well. So you can maintain the function of building parts longer through regular maintenance and prevent problems from becoming bigger problems. Regular maintenance is also an important strategy for reducing waste and can save you some money in the long run.


Monthly Bookkeeping and Accounting [Management
Posted on January 30, 2015 @ 06:47:00 AM by Paul Meagher

For many small businesses and startups this is a critical time of the year to establish good bookkeeping habits. The end of the first month of the year is when you should make sure that your books for the first month of 2015 are up to date. Your "books" don't have to be entered into a professional accounting package although that would be nice if you can manage it. As long as you are keeping track of all your business related income and expenses for the month, filing all of your receipts by month and/or by bill type, recording the beginning mileage for your vehicle, etc... so that when tax time comes next year you are not scrambling through a disorganized mass of receipts, statements, invoices, and emails to figure out your income and expenses for 2015. You can also have multiple folders per month to organize things a bit more.

The end of each month is a natural time to take stock of what you've done business wise that month. You can record your income and expenses in a scribbler, in a text file, in a spreadsheet, in a database, in an online book keeping service, or in an accounting program. It doesn't matter at this point, the important thing is to create a record of some form that journals all the important business transactions from January 2015. If you wait until next month, your memory for what you did in January 2015 will begin fade, your pile of receipts will build up more, and the task of bookkeeping will become increasingly uninviting. I'm talking from experience here and this advice is as much to myself as it is to you.

Getting into a monthly habit of making sure your business bookkeeping is up to date, even if your transactions are recorded in a scribbler, sets the stage for making ongoing improvements to your bookkeeping systems as each month goes by this year. It is also not too late to register a business to make filing your income taxes more logical next year.

The simplest thing you can do to get started is to create a folder (or folders) for all your statements and receipts that is titled "January 2015" (add extra labelling if you have multiple folders). Put a copy of all relevant transactions, statements, invoices, receipts and so on for January in this folder. You can arrange your system differently later on but at least this is a start. I'm no guru on accounting but there are guru's online who can give you ideas about how to setup various expense and income accounts that you might to record your transactions under. There is no single right way to do your accounting, whatever works for you and makes tracking your business expenses and income over the year possible and also makes doing your taxes in 2016 less painful. You don't have to set the bar too high for yourself because you can keep improving your bookkeeping and accounting systems each year, however, the foundation for all of it is getting into a habit of spending some time trying to get your books are up to date at the end of each month. Fail this task now and you are setting yourself up for another year of financial chaos that only gets straightened out when income tax season rolls around again next year.

So enjoy the Superbowl this weekend, but make sure that you also put aside some time to get your books for January 2015 in some type of order, even if that just means putting all your transactions in a folder, figuring out your starting mileage for 2015, and perhaps printing off some bank statements and bills if you ultimately end up printing these off for your records or when doing your income taxes for the 2015 tax year. Get on top of it now, and get into the habit of doing your bookkeeping and accounting at the end of each month, and you will master a critical business skill that will reward you with a better sense of your ongoing financial situation throughout the year and will make doing your income taxes next year relatively pain free. You will also be in a better position to optimize the taxes you pay out each year if you know where you are financially, what expenses you have to claim so far, what sales taxes you currently owe to the government, what sales taxes you can claim, and so on. Better bookkeeping is power when it comes to figuring out how to optimize your tax situation.

In conclusion, if your resolution for 2015 was to improve your bookkeeping and accounting systems, the end of January 2015 is the critical time to set yourself up to accomplish that by doing some month end bookkeeping and accounting (the latter implies that you have some income and expense categories setup to record transactions under).




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