Ohio Investment Network


Recent Blogs


Pitching Help Desk


Testimonials

"This is the best money I've spent so far trying to attract qualified investors. I've attended several VC and Angel Investor events over the past year to attract investors and this site has attracted the most relevant and qualified investors so far. Thanks! ~ James Fitzgerald - ChainStar USA"
James Fitzgerald - ChainStar USA

 BLOG >> December 2018

Business Asset Categories [Entrepreneurship
Posted on December 19, 2018 @ 10:05:00 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.

The Accounting Coach article What are assets? defines an asset as follows:

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?

Investopedia also has an article on business assets that offers other distinctions we might use when thinking about assets.

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.

You can find this pump on Amazon. The pump is listed on Amazon USA and Amazon Canada (which has reviews).

Permalink 

Business Asset Accumulation [Entrepreneurship
Posted on December 13, 2018 @ 12:13:00 PM 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.

Permalink 

Camera Upgrade [Nature
Posted on December 10, 2018 @ 11:04:00 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.

Permalink 

December Business Planning [Entrepreneurship
Posted on December 1, 2018 @ 04:27:00 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.

Permalink 

 Archive 
 

Archive


 November 2023 [1]
 June 2023 [1]
 May 2023 [1]
 April 2023 [1]
 March 2023 [6]
 February 2023 [1]
 November 2022 [2]
 October 2022 [2]
 August 2022 [2]
 May 2022 [2]
 April 2022 [4]
 March 2022 [1]
 February 2022 [1]
 January 2022 [2]
 December 2021 [1]
 November 2021 [2]
 October 2021 [1]
 July 2021 [1]
 June 2021 [1]
 May 2021 [3]
 April 2021 [3]
 March 2021 [4]
 February 2021 [1]
 January 2021 [1]
 December 2020 [2]
 November 2020 [1]
 August 2020 [1]
 June 2020 [4]
 May 2020 [1]
 April 2020 [2]
 March 2020 [2]
 February 2020 [1]
 January 2020 [2]
 December 2019 [1]
 November 2019 [2]
 October 2019 [2]
 September 2019 [1]
 July 2019 [1]
 June 2019 [2]
 May 2019 [3]
 April 2019 [5]
 March 2019 [4]
 February 2019 [3]
 January 2019 [3]
 December 2018 [4]
 November 2018 [2]
 September 2018 [2]
 August 2018 [1]
 July 2018 [1]
 June 2018 [1]
 May 2018 [5]
 April 2018 [4]
 March 2018 [2]
 February 2018 [4]
 January 2018 [4]
 December 2017 [2]
 November 2017 [6]
 October 2017 [6]
 September 2017 [6]
 August 2017 [2]
 July 2017 [2]
 June 2017 [5]
 May 2017 [7]
 April 2017 [6]
 March 2017 [8]
 February 2017 [7]
 January 2017 [9]
 December 2016 [7]
 November 2016 [7]
 October 2016 [5]
 September 2016 [5]
 August 2016 [4]
 July 2016 [6]
 June 2016 [5]
 May 2016 [10]
 April 2016 [12]
 March 2016 [10]
 February 2016 [11]
 January 2016 [12]
 December 2015 [6]
 November 2015 [8]
 October 2015 [12]
 September 2015 [10]
 August 2015 [14]
 July 2015 [9]
 June 2015 [9]
 May 2015 [10]
 April 2015 [9]
 March 2015 [8]
 February 2015 [8]
 January 2015 [5]
 December 2014 [11]
 November 2014 [10]
 October 2014 [10]
 September 2014 [8]
 August 2014 [7]
 July 2014 [5]
 June 2014 [7]
 May 2014 [6]
 April 2014 [3]
 March 2014 [8]
 February 2014 [6]
 January 2014 [5]
 December 2013 [5]
 November 2013 [3]
 October 2013 [4]
 September 2013 [11]
 August 2013 [4]
 July 2013 [8]
 June 2013 [10]
 May 2013 [14]
 April 2013 [12]
 March 2013 [11]
 February 2013 [19]
 January 2013 [20]
 December 2012 [5]
 November 2012 [1]
 October 2012 [3]
 September 2012 [1]
 August 2012 [1]
 July 2012 [1]
 June 2012 [2]


Categories


 Agriculture [77]
 Bayesian Inference [14]
 Books [18]
 Business Models [24]
 Causal Inference [2]
 Creativity [7]
 Decision Making [17]
 Decision Trees [8]
 Definitions [1]
 Design [38]
 Eco-Green [4]
 Economics [14]
 Education [10]
 Energy [0]
 Entrepreneurship [74]
 Events [7]
 Farming [21]
 Finance [30]
 Future [15]
 Growth [19]
 Investing [25]
 Lean Startup [10]
 Leisure [5]
 Lens Model [9]
 Making [1]
 Management [12]
 Motivation [3]
 Nature [22]
 Patents & Trademarks [1]
 Permaculture [36]
 Psychology [2]
 Real Estate [5]
 Robots [1]
 Selling [12]
 Site News [17]
 Startups [12]
 Statistics [3]
 Systems Thinking [3]
 Trends [11]
 Useful Links [3]
 Valuation [1]
 Venture Capital [5]
 Video [2]
 Writing [2]