Posted on February 14, 2018 @ 03:56:00 PM by Paul Meagher
I just finished doing my year end accounting and tax return for an incorporated business I own and am getting ready to get started on the year end accounting and tax returns for a sole proprietorship business and a farm partnership business (with my wife). A downside to running multiple businesses is the amount of accounting and tax work involved. It can consume more and more of your time if bookkeeping is not properly managed. Every year I try to get a little better at it but I still have alot to learn. I am therefore on the lookout for palatable videos on bookkeeping and accounting and thought I would share a recent find with you.
I called this blog "bourbon and bookkeeping" because the 2 book authors in this discussion, Curtis Stone (The Urban Farmer, 2015) and Julia Shanks (The Farmers Office, 2016), agree that you may need liquid motivation to get exited about accounting work.
Posted on February 8, 2018 @ 11:17:00 AM by Paul Meagher
Eliot Coleman, along with his wife Barbara Damrosch, own Four Season Farm in Harborside, Maine. They are both skilled growers with Eliot tending more to the vegetable side of the business and Barbara tending to the
flower side of the business. They also write books for a living.
Eliot is well known as an innovator in season extension techniques and for designing new market gardening tools that have become standard market gardening tools (i.e., Tilther, Six-Row Seeder). I searched YouTube to see what Eliot was up to lately and enjoyed this recent keynote speech
called Nothing Is Impossible.
Before Eliot, most growers would have thought it was fool hardy to try to grow vegetables commercially in Maine throughout the winter in unheated greenhouses. How was he able to accomplish this feat? Here are some of my answers based on this video.
You need a certain amount of grit, what Eliot calls stubbornness and persistence, to achieve an impossible goal or solve an impossible problem.
One of the major motivations for Eliot to achieve the impossible was the desire to not lose his vegetable customers in the winter to California growers. You can be motivated to solve an impossible problem for many reasons, but keeping ahead of the competition is often a major source of motivation.
3. Problem is the solution
Permaculture founder Bill Mollison was fond of saying that the problem is the solution. Solving an impossible problem often requires looking at the problem as a solution to other problems. Growing veggies in winter solves the problems of market differentiation, better pricing, and pest control. Eliot is able to differentiate the produce he grows in winter from produce grown in California. His carrots, for example, benefit from being stored in the cold ground for awhile before they are harvested. They become sweeter and he is able to successfully market them as "candy carrots". Eliot is also able to price his produce higher if he is in the market with fresh veggies before other local growers. Over wintering crops or getting an early start makes this happen. Finally, growing crops in winter solves the problem of dealing with lots of insect pests that are only active in warmer temperatures. So part of solving an impossible problem is seeing aspects of the problem as the solution to other problems.
4. Practical inspiration
When we travel we often think of visiting art museums, beaches or other tourist sites. When Eliot travels he likes to visit hardware stores to see what they have that hardware stores in Maine don't. Eliot finds design inspiration in how other people solve practical problems although he probably has lots of theory to draw on as well. Eliot reminds us that another reason to visit distant places is not just to enjoy their tourist attractions but also to study the ways they solve practical problems. This might help you to see an impossible problem in a new light.
Another source of inspiration for solving impossible problems that Eliot does not mention is to study the lives of other animals and how they solve impossible problems. How is a caterpillar able to freeze rock solid but once it is warmed up it can go on about its business? How is a duck able to stay warm in a frigid pond? How is a queen bee able to maintain a sperm for several years from a one time mating episode with multiple drone bees? Humans need to freeze sperm to preserve it for that long.
One way to solve impossible problems is to see if nature has already solved a similar problem.
Partnering with inventors
Eliot has helped make Johnny Seeds (a 100% employee owned company) quite a bit of money from popular market gardening tools he helped to develop. Eliot developed early prototypes for new tools and then partnered with Johnny Seeds to manufacture and sell them. Eliot claims not to be making money of these inventions because he is primarily interested in seeing his ideas developed to the point of commercialization. I'm not sure if this type of partnering would work in other industries but it may be worth thinking about how you might partner with highly skilled people in your industry to help develop their ideas into commercial products. Rather then trying to invent things in-house, perhaps you can invest that time and money into identifying skilled practitioners and offer to support the development of their inventions to make life easier. It would be interesting to know more about how Johnny Seeds is able to benefit from Eliot Coleman's inventive mind.
Posted on February 1, 2018 @ 01:52:00 PM by Paul Meagher
Neversink Farm has been releasing lots of new YouTube videos. Because
of my interest in farming YouTube recommended I watch their videos. I took the bait and am glad I did.
The two main claims to fame of Neversink Farm are:
1. In 2017 they claimed to be grossing $350,000 on 1.5 acres of land. That puts them into the top 1% of farms in terms of farm productivity.
See this popular video that goes into detail on their approach
2. A large part of their farming success is due to what they call a systems-based approach to farming. Part of what this means is that each vegetable is grown according to a particular system and they are always looking for ways to improve that particular system in the most impactful way. This leads to ever higher productivity on the same amount of land. A system-based approach also integrates growing with how you intend to retail your crops so it takes into account factors beyond the farm as well.
In some of Conor Crickmore's recent videos he reflects on his first year in farming and what he learned. I think they contain useful lessons
for startups in industries besides farming.
I knew Bernd from some of his other popular science books but was curious about what the concept of Bumblebee Economics might consist of. Bernd invokes a combination of economic, energetic, and societal factors to explain why, for example, a colony splits to form two colonies. When a colony reaches a certain size, the bees can become more aggressive with each other. The area around the colony can become too large to be efficiently foraged from one location or it may not have sufficient nectar sources. The objective of the queen is to reproduce her lineage so starting a new colony is generally part of the yearly mission. Factors such as these eventually lead a colony to the decision to start a new colony.
This may be an overly complex analysis of the factors driving the decision to start a new colony. Perhaps some chemical compound in the colony hits a certain concentration and this signals that it is time to split up the colony. In the absence of said chemical compound, however, you might have to resort to more complex socio-economic factors to explain why things are as they are in bumblebee land. Hence the need for an economic type analysis of bumblebee behavior.
If bumblebees can be said to have what amounts to an economy, then what is the currency? Pollen is necessary for reproduction of the colony and the reproduction of flowing plants. Nectar is used for energy and is stored in the form of honey after it is regurgitated from their honey gut.
Perhaps bubblebees have two currencies, pollen and nectar, that are traded for different purposes. You might be able to construct a measure of colony growth by measuring the amount of pollen stored and traded among plants or the amount of nectar consumed and stored as honey by the colony and its descendants.
Natural economics deals with how economies worked before the invention of money, or when the use of money was a negligible part of the economy. Perhaps thinking about pollen and nectar as currencies is misleading because bees live in a natural economy rather than the artificial economies that humans create in which money is central. It is nevertheless interesting to think about the role of pollen and nectar in the bumblebee economy and the extent to which they might be considered units of trade.
Bumblebees are social insects that join together into colonies. A colony might be equated with a franchise business model where the goal is to create new instances of itself in order to exploit new niches.
Bumblebees are part of a network consisting of flowering plants that they get energy from and help to reproduce. Different varieties of birds consume the seasonal fruit set of the pollinated plants. These birds also help to propagate plants through the undigested seeds they release. The macro-economic system of bumblebees is affected by the abundance of flowering plants and birds in their ecosystem. Each actor in this network plays a critical role and if one is harmed or enhanced the others are likely to be harmed and enhanced as well.
Comparative economics studies "different systems of economic organization, such as capitalism, socialism, feudalism and the mixed economy". If bee behavior can be explained from an economic point of view perhaps we can add bee economics to the list of economic organizations that human economic organizations could be compared to. Why would we want to? It might allow us to come up with new ideas about how economies and firms could be organized.
The author argues that honeybees provide a useful model (or reminder) of how democracies should be organized. You could also study bumblebee anatomy or physiology for ideas about how to design an engine or a new type of drone aircraft. Bumblebees anatomy and physiology is particularly interesting because bumblebees are active in colder temperatures that most other insects.
Deduction doesn't create anything new. You work from existing ideas, apply logic rules, and arrive at new ideas that were already implied by your existing ideas. Analogy is therefore necessary to arrive at new ideas. Taking an existing system and comparing it to another system can help you to think about the second system in new ways. If bees can be said to have an economy, a language, and democracy then they might offer us opportunities to think differently about economic organization, language, and democratic institutions. This means that we can study bees not simply because they are fascinating creatures but also because of the ideas they might inspire about how to solve complex human problems.
This diagram offers a way to think about change and succession in the natural world and possibly also in the business world. The basic idea is that when a new niche opens up there are companies that are effective at exploiting that niche and a large cohort who are not. Some of the successful ones will eventually scale up, gather up more resources and occupy more land, and will become more complex to the point where a reckoning of some sort leads to a phase of release and reorganization in the context, perhaps, of a transformed niche.
As an example, we might think about a company like Facebook who were successful at exploiting a social media niche and building on that early success to become a dominant social media company. The complexity of the company only grows as it welds increasing influence in personal, community and political affairs. Mark Zuckerberg has acknowledged that there are problems with Facebook and made a resolution to "Fix Facebook" in 2018. Perhaps Mark is acknowledging the need for an adaptive cycle of release and reorganization in order to evolve the company to the next stage. He may also be anticipating that if he does not signal a willingness to "fix facebook" then powerful government organizations might make that decision for him. At any rate, we may be witnessing the midpoint of an adaptive cycle where Facebook will release and reorganize perhaps like Google did when it turned into Alphabet but with some deeper fixes as well.
What is true of Facebook and Google may be true also of smaller companies. In the startup literature there is the concept of a "pivot". A startup may launch with the conviction that a certain business model will be successful and eventually realize that the business model is not working. At that point they might persist in their folly giving it "one more chance", they might fold the company and call it a day, or they might "pivot" to a new business model that is more likely to be viable and test if that is so. The psychology of sunk costs often makes it very difficult to recognize the need for and motivation to pivot.
One suggestion might be that instead of framing these major decision points as exceptional "pivot" moments we might frame them as part of an adaptive cycle and expect to encounter multiple release/reoganization phases as a company regenerates itself in response to a changing niche or changing corporate objectives.
In conclusion, the Adaptive Cycle is a tool for through that is meant to help you think about how growth and succession happens. Nature appears to generally follow this cycle (i.e., animal or plant death and subsequent nutrient recycling are the release and reorganization phases in the diagram). The Adaptive Cycle concept may not have much usefulness for thinking about company dynamics but it is worth googling the concept a bit more before you draw that conclusion. I have not done justice to the extensive research behind the concept but decided to blog about it because I think the diagram is a potentially useful "tool for thought" for startups and more established businesses facing the challenges of growth and succession.
Posted on January 10, 2018 @ 12:22:00 PM by Paul Meagher
I recently came accross a site called The Next System. The reason was to find an article
by Peter Victor and Tim Jackson called Towards a New Green Economy (November, 2016). I'm still in the process of reading that article.
Alot of the articles in this site are trying to articulate what the "the next system" will be. Much of it focused on what the next economic system will be.
I think it is an interesting question to ponder ... what the next system will be?
Adding the term "system" implies a level of interconnectedness among the components that rules out smaller innovations that affect us in more limited ways. 99% of innovations that are hyped probably fall into that bucket.
So the next system will be interconnected in certain ways that produces some massive, hopefully desired, outcome.
It might also be nice if the next system wasn't 50 years away, the closer in time the better.
One candidate for the next system would be a Solar Panel Economy. A solar panel economy is simply an economy where the solar panel area increases exponentially every year with a Gross Domestic Solar (GDS) index being used instead a Gross Domestic Product (GDP) index to measure the overall health of the material economy.
A solar panel economy may not sound as sexy as a new green economy which is a more abstract goal. What I am proposing is a very specific goal for the next system that would be measured by a specific growth indicator. The indicator may have usefulness only over a certain period to be replaced with some other indicator once we have achieved sufficient growth in solar panel area.
A solar panel economy is one that an increasing number of people can participate in as solar technology continues to get cheaper, better and more accessible.
A solar panel is the specific enabling technology for a larger solar power system that can be installed in homes, apartments with the right orientation, or sheds for motive benefit. It doesn't have to be a big installation and people with cheap outdoor solar lights are arguably slowly easing into that economy. They are gaining some experience and perhaps starting to see other opportunities for the deployment of solar panels.
I'm not suggesting that other sources of renewable energy are not important or significant or shouldn't be included in some calculation of the health of the material economy. Solar panel technology is arguably a bit different in terms of how accessible and deployable it is relative to other renewable technologies and for that reason should be highlighted in some way in how we measure material progress.
Part of what inspired this suggestion is my own tinkering with the main components of a solar power system: a 100 watt solar panel, a charge controller to trickle charge a deep cycle battery, an inverter to convert battery dc power to ac power that also has convenient electrical plugins attached to it, and some wires and car starter cables to interconnect everything. Trying to scale up solar power to just a 100 watt system opens up your eyes to what the next system could be in way that is difficult to appreciate until you have tried to assemble a small scale solar power system. The potential to be "off grid", for example, opens up opportunities for where you might build and what you might build.
Setting up a small scale residential solar power system is possible, it can happen now with off-the-shelf technology, and most people can begin to participate as long as they don't electrocute themselves. For these reasons, perhaps the solar panel economy will be the next system?
This probably sounds like cheer leading for the solar panel industry and to learn some of the downsides you should read the critical activism book Green Illusions (2012) by Ozzie Zehner. I am just putting the solar panel economy idea out there and suggesting that as more people start to assemble the next power system in their homes, apartments and shed and share their experiences then that could spark the solar panel economy that I am predicting is on the near term horizon.
Energy drives everything and when we start changing the energizing system for an economy to solar we should be measuring that growth using a Gross Domestic Solar index and perhaps eventually using GDS as a proxy for the health of the material economy. In the material economy we now require a decoupling of environmental impact from GDP growth that might only be possible with the advent of a solar panel economy.
Posted on January 3, 2018 @ 07:35:00 AM by Paul Meagher
In part 1 of this blog series I argued that time, not money, is primarily what needs to be invested when one decides to invest in nature. Shortly after releasing that blog the Polar Vortex hit and I was reminded that investing in nature can be difficult, bordering on unpleasant, when the weather is harsh. This can test your resolve to continue investing just like down periods in any business will. Do you pull out of that investment when things get difficult or do you soldier on?
I think there is a compromise that can be made. You can invest in nature by being in nature but you can also invest in nature by learning about nature so that your experience of nature is more stimulating. So if you would ideally like to spend 2 hours a day in nature, you might spend the full 2 hours outdoors, but when the weather is not so hospitable, you could invest, say, 1 of those hours reading some books about nature that will enhance your appreciation of nature and perhaps motivate you to spend the other hour in nature.
Three books that am reading to help me appreciate nature more are:
The Forest Unseen: A Year's Watch in Nature (2012) by David George Haskell. About a biologist who revisits a square meter patch of old growth Tennessee forest (which he calls a Mandala) regularly throughout the year and records his observations and thoughts. This is local investing taken to an extreme. Where Henry David Thoreau travelled a great deal Concord, David Haskell has chosen to visit the same small patch of land repeatedly throughout the year to better understand how nature changes through the cycle of a year.
Reading the Forested Landscape: A Natural History of New England (2005) by Tom Wessels. If you walk in a forested landscape, there are often signs that indicate what has happened in the past which resulted in the landscape you are currently seeing. This books provides you with ideas and clues of what to look for and what they mean. It will make walking in a forested landscape more stimulating.
Winter World: The Ingenuity of Animal Survival (2003) by Bernd Heinrich. Bernd is one of the best scientific nature writers and in this book he discusses the many ingenius ways that animals survive under conditions that we would perish in.
Bill Gates and Warren Buffett are reportedly both avid readers who spend any free time they have engaged in reading. Where they may read books that help them to better invest their money, those who wish to invest their time into nature might prefer to read books that help them to enjoy their time in nature more.
On a different note, this painting titled Lake Superior Painting X by Lawren Harris fetched 2.47 million at an auction in 2014.
Posted on December 19, 2017 @ 01:33:00 PM by Paul Meagher
If you google the phrase "invest in nature" you will encounter companies discussing various green projects they are funding. There will also be complaining about how government should be doing more to help the environment. This is certainly one way you can understand the phrase "invest in nature": it is about how to allocate funding to fix or improve some aspect of the natural world. The purpose of this blog, however, is to offer another interpretation of what "invest in nature" should mean.
I propose that "invest in nature" refers primarily to how you allocate your time, not your money. In fact, you can invest heavily in nature without spending a dime if you are spending a lot of quality time in nature.
Time as Money
Investing time into nature is a real investment because you could be doing other things with your time. Instead, you are investing your precious time into getting out and doing stuff in nature. As you get older, time is more precious than money which makes the investment of time into nature even more significant.
Partially or Fully Invested
When you are out in nature you can be checking out your smart phone, listening to music and chatting to people on the phone. There is nothing wrong with that and nature is a nice backdrop for all these activities. It is time in nature but you are not fully invested in nature while you are there. You may be getting exercise or going from point A to B but you are probably oblivious to alot of what is happening around you. If you are going to invest in nature consider whether that means spending time there doing other things or whether you intend to be fully invested in your surroundings. Some of benefits of an investment into nature can only be realized if you spend some of that time fully invested in what is happening around you.
There are alot of investments you can make that are cause for regret afterwards. When you invest time into nature you don't regret it.
Return on Investment
Does investing time into nature benefit the investor in the long term? Some aging research suggests that one of the keys to a long life (100+) is spending a good amount of time in nature gardening, walking, exploring and so on. That is only one type of benefit you might expect and perhaps not even the most important.
What benefit a person derives from investing in nature is a deeply personal issue. What benefits I get out of it, and what benefits you get out of it, don't have to be the same.
One of the benefits I get out of nature, for example, is the experience of natural beauty for which there is no substitute. Like this Icy Splendor I encountered exploring a new walking path last weekend.
Nature Is All Around You
Nature pervades everything. Nature may be more difficult to recognize in the city but it is still omnipresent. Nature interfaces more with the built environment in the city than in the country and this interfacing is often quite interesting to observe. For example, the reservoir for our town water supply drains into a concrete spillway that takes it to a structure designed to slow the water down before it merges back into a stream. This video, which I call, Interface, illustrates how the built and natural merge in an interesting way.
You can invest your time into traveling the world in search of the next natural wonder to explore or you can be like Henry David Thoreau who said "I have traveled a good deal in Concord". Within a 50 mile (80 km) radius of where you live there are likely many areas you have never explored and it may take a lifetime to fully explore all of nature in that area. It may take some planning to find new local places to explore and visit but that is also what it means to invest in nature.
Investing locally is often viewed as a good thing. Investing your time exploring nature in your local area can be the foundation of any monetary investing into nature you may ultimately decide to do. Investing time into nature as the foundation for investing money into nature.
A Holiday Mantra
Lately I have been using the phrase "invest in nature" as a mantra to remind me to get out and do things in nature and to reflect on how I want to spend that time. I'm especially excited to have a few days off over the holidays to explore nature without the rush to get back to work. Maybe you can use the mantra "invest in nature" over the holidays to remind you to devote some time to getting outside to enjoy and learn about nature. You will have no regrets over the holidays if you invest time into experiencing nature.
Posted on December 12, 2017 @ 09:13:00 AM by Paul Meagher
This morning I read an article about Dr. Raj Lada's research on SMART Christmas trees. A primary goal of his research was to slow down how long it takes for Balsam Fir trees to lose their needles. This is a problem for consumers that don't want Christmas tree needles all over their living room, and for the producer who wants to ship their product further afield without worrying about needle drop.
Many factors control post-harvest needle drop from how well hydrated the tree is, what type of hydration is used (don't use clorinated water), where it is positioned (away from a heat source), how it is transported (covered with burlap if travelling a longer distance) and so on. Genetically, however, there are also factors that can prevent needle drop such as how much of the plant stress hormone Ethelene the tree produces. Ethelene ripens fruit and also has an effect on how quickly needles drop. Dr Lada has developed a variety of Christmas tree that produces less Ethelene and is able to retain its needle 2 to 3 times longer (potentially up to 3 months). This is a big deal in the world of Christmas tree retail and production.
The term SMART is an acronym for Senescence Modulated Abscission Regulating Technology. The first SMART seedlings were planted this year so we'll know better in a few years whether such trees will command the premium price developers and growers are hoping for.
Better color, aroma and pest resistance are other attributes that SMART Christmas Tree developers are looking to add to the Balsam Fir gene pool.
This research illustrates a few points:
Don't take anything as a given. Many of us endure fallen needles without thinking this attribute might be improved.
What makes things SMART is not just electronics based. In this age of global warming, we may need alot of our plants to become SMARTER in order to adapt. See Kernza for an example of a SMARTER grain seed.
Industry, Government and Academia can work together well when there is a clear problem to be solved (e.g., needle drop problem) but industry alone lacks the expertise and capital necessary to properly address it.
Ironically, the Christmas Tree Research Centre is slated to shut down after Christmas of this year due to lack of ongoing funding. Dr Lada believes that there is alot more work he could be doing to improve Christmas tree traits. My conjecture is that after hitting his home
run on addressing needle drop, other attributes are not considered as important to solve. You apparently cannot rest on your laurels for very long these days.
Part of the Christmas Tree research project involved touring around to find the best Balsam Fir tree specimens to select from. Needles were donated by the owners of this Christmas tree to the research project.
Posted on November 30, 2017 @ 09:01:00 AM by Paul Meagher
I recently decided to scale up the water holding capacity of my farm property by purchasing a used 2000 gallon plastic tank. Here is what the beast looks like:
This was not a carefully planned purchase. There was a good deal on it ($250) and I envisioned a few possible uses for it on the farm so I purchased it before someone else got it. Now that I have purchased it, the concept of scaling up seems much more visceral and real and is the inspiration for my thoughts about scaling up today.
1 US gallon of water (3.785 L) weights approximately 8.34 pounds or 3.78 kilograms at 62 °F (17 °C). 2000 gallons of water would weight 16,680 pounds or 8.34 US tons. When I said this to my wife she said it would take ALOT of water to fill it up. That is true, but we have a big roof on our farm property to potentially collect the water from.
In the left side of the photo you can see a 1000 liter water tote (264 US gallons) that is currently collecting water off a side roof on the barn. That tote can be filled within 4 hours in a heavy rain event. I'd estimate that I could fill the 2000 gallon water tank at least half full (1000 gallons or approx 8000 lbs) in one such rain event by collecting water from one side of the main roof - the right side. When I drop off the tank, I may end up placing the rain collector around there for now. I'll wait til next spring to hook it up.
So one principle of scaling up is that you should have the capacity to scale up before you do so. I could have filled the big tank with runoff from the farm house more slowly but I was mainly thinking of using my barn roof when I purchased this tank. A 2000 gallon tank seems to me to be the size of tank appropriate to collecting rain off a much larger roof surface such as a barn. I can cycle through emptying and filling the tank more quickly with barn roof runoff. The equivalent idea in business might be to make sure you have the person power in place before you start scaling up a line of business. Match scale to capacity.
Another aspect of scaling up is that there are multiple consequences of scaling up, not just one. I am scaling up my water holding capacity, but I am also scaling up my water pressure in ways that I haven't tried to calculate yet. All of the vines and trees I've planted are located down hill from the farm. When I tried to gravity feed irrigation from my 1000 liter water tote I was disappointed with the non-existent pressure I was getting. I eventually had great pressure when I attached a transfer pump to the water tote.
I don't know right now what water pressure I should expect from a discharge valve at the bottom of an overflowing 2000 gallon tank. The normal state for my smaller 1000 liter tank is to be full. When rain events happen on a full tank an overflow pipe positioned at the fill level keeps the tank from filling the tank any higher. There is alot of downward force involved in a full 2000 gallon tank. I'm sure some Texas or Alberta oil field worker could enlighten me quickly. They could probably also enlighten me on the ground preparation work that should be done and perhaps the best way to elevate the structure if I decided I wanted even more pressure.
The point is that when you scale up, you don't just scale up on your desired dimension (more water) you also scale up in other dimensions which may (more pressure) or may not be (more groundwork required) positive outcomes but which will need to be addressed in your planning. The more you can quantify the outcomes across all dimensions the better your scale planning is likely to be.
Another aspect of scaling up is having a use for your scaled up capacity. I must admit that I currently don't make much use of the water I do currently collect so why should I bother collecting even more water? One answer is that it would be better NOT to use a transfer pump as a long term solution to pressurizing my irrigation water. The larger water holding capacity will allow me to pressurize my water more and perhaps allow me to realize my original gravity-based irrigation plans for the vines, fruit trees, nut trees and my home gardens. If that is true, I will be able to take advantage of the increased storage capacity and gravity pressure to help my plants grow better.
Finally, suppose that I start collecting water and find a use for the larger capacity of available irrigation water. That might be a good time to make the decision to scale up further by adding another 2000 gallon tank. In other words, don't prematurely over scale your operation. I would like to have more water holding capacity but there is a sensible limit right now as to how far I should increase my capacity. Likewise, when scaling up a business operation, is there some natural limit to how far you should try to scale up in this iteration of your business?
To conclude, scale planning is important for any business that plans to grow which I have tried to illustrate with the example of scaling up my farm water holding capacity with a bigger water tank. This is a relatively simple example of scaling up but it nevertheless illustrates some of the issues involved.
Posted on November 24, 2017 @ 01:57:00 PM by Paul Meagher
Entrepreneurship is not a spectator sport. One of the main activities that entrepreneurs engage in is building. They build to solve problems on the way to achieving a goal.
One goal I finished addressing today was winterizing my green house. A section of the plastic on the roof ripped open in a windstorm so I eventually ended up replacing the full roof with hard plastic Tuftex panels - transparent on the south facing side, white on the north facing side (mostly because the cost of the transparent panels was double the cost of the opaque panels). These hard plastic panels added some needed rigidity to the building and I added gussets and braces to the worst walls to strengthen the walls and help ensure they don't flex and wander as much in the wind.
The green house winterizing project didn't end with the roof project as I had to figure out what to do with the screen window I leave open during the summer and fall (so it doesn't overheat). It is now time to close the window area in. Usually, I use plastic but this year I decided to re-purpose an old window and make it so that it is easier to open and close the window on an as-needed basis. Here is what I ended up building.
The purpose of this blog is to give a simple concrete example of what I mean by building value. Something similar has to be done on an ongoing basis to build anything of any value. As you keep building, the value of what you build keeps increasing and you may find yourself investing even more time, energy and capital into building value. Or you may just say it is good enough which is where I am at now on my greenhouse winterizing goal. Time to move onto solving the next problem.
Building is how entrepreneurs solve problems and add value. They build their way out of problems. I've heard several investors say that the reason they wouldn't invest in a project is because the entrepreneur was "not a builder".
Building isn't always about building something new. Most of my building has been fixing up something that currently exists so it looks or functions better. Building new stuff is more exciting, but fixing old stuff may be equally if not more important. Unfortunately, new stuff doesn't stay new for long.
Posted on November 22, 2017 @ 09:20:00 PM by Paul Meagher
I was listening on the radio to a couple of female entrepreneurs talk about running their restaurant. The interviewer
asked them what they were reading hoping to get some good motivational or business recommendations. One of them
responded by saying she was reading the building code.
As a restaurant owner she was probably not required to read the building code but it likely comes in handy
if you are planning any renovations or additions.
Sometimes what you have to read to get ahead is not particularly pleasant stuff to read, but it could be very beneficial if you can persist at trying to absorb it. For me, reading the building code is a metaphor for all
that unpleasant but useful reading that could help your business survive and thrive.
There is no rule that says that what you read always has to be pleasant or that what is pleasant to read is what you should be reading. If you are wasting too much time on book keeping and accounting, maybe you need
to spend some time reading about basic book keeping and accounting. Or, maybe you have to read municipal council minutes because you heard they are planning a project that might impact you. Or how about a legal text on the laws relevant to your business.
So the next time you think about what book you should be reading next, don't just think of all that NY times best-seller stuff that is interesting but not useful. Perhaps you might also be inspired by this blog to read your local or national building codes or literature of similar gravitas.
Posted on November 21, 2017 @ 12:26:00 PM by Paul Meagher
I am slowly making my way through Geoffrey West's book Scale (2017). I am finally getting into his discussion of cites and how we might think about them. He makes this interesting observation:
This may seem obvious, but the emphasis of those who think about cities, such as planners, architects, economists, politicians, and policy makers, is primarily focused on their physicality rather than on the people who inhabit them and how they interact with one another. It is all too often forgotten that the whole point of a city is to bring people together, to facilitate interaction, and thereby to create ideas and wealth, to enhance innovative thinking and encourage entrepreneurship and cultural activity by taking advantage of the extraordinary opportunities that the diversity of a great city offers. This is the magic formula that we discovered ten thousand years ago when we inadvertently began the process of urbanization. Its unintended consequences have resulted in an exponentially increasing population whose quality of life and standard of living have on the average also been increasing. ~ 252.
Geoffrey then goes on to define a city as follows:
Cities are emergent complex adaptive social network systems resulting from the continuous interactions among their inhabitants, enhanced and facilitated by the feedback mechanisms provided by urban life. ~p 253
In discussions of city planning, the name Jane Jacobs often comes up. She helped to derail the plans of powerful New York city planner, Robert Moses, from putting an expressway through some culturally important neighborhoods of New York - Greenwich Village, SoHo and Little Italy. She also argued that it was the interactions in these neighborhoods that made them great and that putting a freeway through the center would destroy that.
West's definition of what a city is shares alot with the definition of what ecology is. Charles J. Krebs in his book Ecology (6th Ed, 2009) defines Ecology as follows:
Ecology is the scientific study of the interactions that determine the distribution and abundance of organisms. ~p 5
This definition suggest that we might be able to use some of the tools from ecology to understand the distribution and abundance of organisms in our cities. Those organisms include humans but also wildlife like these 2 deer that visited me last week when I was working outside.
I think it is worth reflecting on what makes a city great and whether it is a quality of the interactions that it affords, the quality of the
physical infrastructure or some combination?
I don't think the great cities of this world are all made from the same cookie cutter. They can be great for different reasons. They can be larger or smaller in size. Some may be a hotbed of innovation where others may be a hotbed of cultural activity, community spirit, natural beauty, or educational attainment.
I started reading from begining to end which I will continue to do, but I also started jumping around to the pictures and then reading all the yellow highlighted sections in the book that denote important topics. One such highlighted topic that I want to comment on is given below:
A Plan for a Beginning Farmer
In the first year don't tackle every crop in the seed catalog. Pick just a few. Starting out, I would seed mixed salad greens and a hardy spinach variety, such as Gazelle, as soon as the ground is workable, and
every week until temperatures linger consistently above 72 F to 75 F. Greens are a sure sell in most markets. Then I would seed
determinate red tomatoes in time to set out after the last frost in your area, or a few weeks earlier if you have a greenhouse or
tunnel. BHN 589 is a dependable variety. In the fall, when nights start to cool to below 68 F, I would seed greens again. If you
can master greens and tomatoes in year one, you are off to a good start. Other easy crops for the first year include radish,
sugar snap peas, head lettuce, romaine, kale, and green beans. If you want to try starting a CSA, take on 10 customers and keep
your season to 12 weeks. Keeping it simple will more likely result in success, and that will build confidence. ~p. 5
This plan is very interesting to me for a variety of reasons, some
of which are listed below.
Planning that gets to this stage of simplicity and clarity offers useful guidance. The objective of business planning is not complexity, but simplicity of process and purpose.
The planning horizon implicit in this plan could be 2 years. That plan would involve using the first year of operation to gain skills and sufficient success and confidence that you are ready to scale up the next year. What isn't mentioned here is that Ben decided to go whole hog and used some angel money (from his family) in the first year to build up infrastructure for the second year so he was ready to scale to a full income level then. Trying to get infrastructure such as water lines, formed beds, greens houses, cooling areas, washing stations in place can be more difficult to do when you are also scaling up your farming orders (e.g., more CSA clients, restaurants, farmers markets). Ben Hartmann, like farming innovator Jean-Martin Fortier, focused in their first year on getting infrastructure in place while downgrading the importance of making a full-income from production in that year. Some income is necessary, however, to accelerate your learning and to validate the enterprise.
The plan can also be implemented as a multi-year plan. You can keep your day job and start commercial farming as a side business. You might not be as ready to scale up in year 2 if you are taking this approach but you may be under no pressure to do so. If you have income from a job you like you can scale up the farming enterprise at whatever pace works for you.
I focused on a two year planning horizon in the title because that seems to me an important planning horizon for any type of business that involves building infrastructure before you can scale to a full-income level of revenue. I thought this plan for a beginning farmer is worth reflecting on as it makes clear some of the issues involved in 1, 2 and 3+ year plans and what you might be doing in each of those years in anticipation of scaling up to the next level.
I am taking the course because of my interest in food production and the promise of a more scientific approach to doing so.
The Netherlands is arguably the world leader in agricultural production: they produce the highest amount of
agricultural products per acre anywhere in the world. I figured if I want to learn about a scientific approach to crop production it might be good to learn what a university in the Netherlands has to say.
One interesting factiod about agricultural production is that from 1950 to 2012 global agricultural production has more than
tripled while only taking up 10% more land area. Can we continue to intensity production in a sustainable way to meet the demands of an increasing population which is projected to be 9 billion by 2050 (currently estimated at 7.6 billion)? That is the main issue that the course tries to address.
The contribution of land area to crop production is not expected to increase significantly during that time so most of the
increases will be due to other factors like technology, knowledge, and innovation.
The faculty at Wageningen have developed a framework called Theoretical Production Ecology that they hope will contribute to the required productivity increases in a sustainable way. I'm not an expert on this approach but I do know that it involves
simulating crop production based on the main parameters that drive the production of that crop. It is a quantitative approach involving the use of animated charts so you can interact with the parameters, see the effects, save the results and compare that with crop model results using different parameters.
The two takeaways for me so far are:
1) There is a Moore's law type of innovation happening in agriculture (not at the same explosive rate but still impressive).
Instead of packing ever more computer performance onto smaller chips, we are packing ever more growing power into smaller spaces. That
might be an underappreciated fact about what is happening in agriculture today. Whether the current approach is sustainable is another issue but
we should at least acknowledge that agricultural productivity has been increasing and take note of what is on the horizon that might lead to
greater productivity and that is also sustainable.
2) The mindset behind theoretical production ecology might be used to think quantitatively about factors of production in other contexts. Entrepreneurs may not be growing tomatoes, but they are growing businesses and perhaps there will come a day when we have models that allow us to vary the main growth parameters of a business and envision how that set of parameters generates different types of yield (number of units produced, profit, expenses, carbon credits, etc..). We can then compare that to
another set of selected parameter values and visualize the different types of yield that configuration produces. Based on these comparisons we would select the optimal set of parameter values for our production plan. This would be a more theoretical approach to business planning. The business models might be specific to the type of business we are engaged just as crop models are often specific to the type of crop being grown.
Posted on October 31, 2017 @ 12:56:00 AM by Paul Meagher
I've been busy processing my 2017 grape harvest into wine (vinification). Just 20 more gallons of crushed grapes to process. My garage fermentation room is starting to
reach its limit as shown in this video.
Two days ago, I had the opportunity to see a brief free concert with one of my favorite local artists, Matt Mays. NYC Girls appears to be the song that he wants to feature first on his new album, Once Upon A Hell of A Time.
I'm also really liking another new song, Sentimental Sins.
Here is a photo at the farm in the early morning just after harvest time. This time of year these magical morning fogs blanket the forest valleys.
Posted on October 24, 2017 @ 09:02:00 AM by Paul Meagher
One of the first essays I had to write in my intro philosophy class was to choose a theory of the good life and argue for why it was the right way to live.
Some of our choices included hedonism, stoicism, epicurianism, utilitarianism and other options that I can't remember. I do remember selecting epicurianism as the best route to the good life. I gave some serious thought to hedonism and stoicism as well.
I'm mentioning this because I recently purchased a book that is currently being recommended on David
Holmgren's site called The Art of Frugal Hedonism. It is a modern spin on how to live the good life. Frugal Hedonism seems to me very similiar to my concept of epicurianism minus the high cost of entry.
The book consists of 50 short chapters with ideas and strategies you can use to become a frugal hedonist. This approach to living has the benefit of being sustainable and enjoyable at the same time.
Many startups are no stranger to frugal living. Frugal living extends the runway for your business and the length of that runway is often directly related to how frugal you can be while the startup is not generating enough income to live the high life. Be careful about wishing for the high life too soon, because you may not experience the same level of enjoyment from a simple beer with friends, walking or biking to wherever you have to go, or a cheap night with friends. It doesn't take much to make you happy when you are used to just getting by as frugally as you can.
David Holmgren is on record as pursuing a life of voluntary frugality so part of the reason he is recommending the book is probably because it aligns in part with his own approach, and perhaps explains the many unrecognized benefits of this lifestyle beyond simply being a sustainable way to live.
For many, the good life is a house, two cars, and all the consumerist items that the catalogs say we need in order to live the good life. There is little evidence that people are happier compared to people who get by on less but have more time, more interests, more friends and other things of equal or more value than money. Getting off the treadmill and consuming less is likely to lead to more enjoyment with life than trying to keep up with the Jones.
Does this mean that entrepreneurs must give up their pursuit of money because it is an overly consumptive way to live? If it is only about making money so you can get all the toys, then frugal hedonism would predict that you will not be happy - you will adapt to ever higher levels of consumerism to try to achieve a disappearing rainbow of enjoyment. If you recognize that money is just the way we keep score but is not the end goal of living, then I think you have a better chance of leading the good life which could be inspired by frugal hedonism.
Frugal hedonism carries the hopeful message that leading a sustainable existence might also be the surest route to the good life. Whether this is true or not is a question worthy of thinking about and this book is a guide to the options, strategies, and joys associated with living a less consumerist existence. And when you do make a choice to consume, you might be more mindful of why you are consuming and what it means to you.
Posted on October 18, 2017 @ 10:14:00 AM by Paul Meagher
Eric Ries wrote what is probably the most popular book ever on starting a business called The Lean Startup (2011). It is therefore worth mentioning when he publishes any new book on startups. I pre-ordered and received my copy of The Startup Way (2017) yesterday.
According to Eric, this book is 5 years in the making. He argues that many of the same lean startup principles (plus some new ones) apply at the enterprise level, to non profits and to government agencies that want to remain innovative and relevant.
I have not yet read beyond the first chapter of the book but what is particularly interesting to me is the issue of whether companies have to manage things differently at different stages of growth to keep on growing or whether similar management principles apply. In my last blog Scale and Complexity I suggested that different principles might apply to manage complexity as a company scales (based on the work by Verne Harnish); however, Eric appears to be making the provocative claim that many of the same lean management principles apply at all scales and for very different types of organizations (i.e., for profit, non profit, government). Eric argues for a unified theory of entrepreneurship that potentially applies at all stages of company growth if the company wants to keep growing. Obviously management of a company earning > 50 million is different in some respects from management in a company earning < 1 million, but what each company might have to do in order to manage ongoing growth and innovation might be similar in many respects. This is one of the issues that interests me and what I will be attending to as I continue reading this book.
For now, however, I just wanted to draw your attention to this book because it looks like it will be another very popular addition to the startup literature. The book launch appears to have been scheduled to coincide with the launch of Eric's new startup The Long-Term Stock Exchange that will be interesting to follow as well.
So far I'm learning about how the number of patents filed scales with city population size (superlinear - more patents in more populated cities), how the amount of infrastructure (e.g., length of roads, water pipes, electrical cables, gas stations, etc...) scales with city population size (sublinear - less infrastructure per person in more populated cities), how per capita Gross Domestic Product (GDP) scales with city population size (superliner - more GDP per person in more populated cities) and many other interesting scaling relationships. The book tries to give a more fundamental account for why such scaling relationships exist; an account that draws upon research in complexity theory. The book is very readable so far and there appears be virtually no math equations on display but appreciating this book will require you to master some basic mathematical concepts like what a linear, logarithmic, exponential, and power law relationship is. If you are rusty on these important mathematical concepts then reading the book to brush up on this stuff would be one reason to read it because he explains them well in the context of lots of examples and interesting discussion. Ultimately, where Geoffrey wants to get to is a "science of cities" that might consist of a fundamental theory that organizes alot of this scaling data.
I'm not that far into the book yet to give any final review.
Verne argues that companies need to "conquer complexity" (p. 24) in order to scale up and that "complexity generates three fundamental barriers to scaling up a venture" (p. 25):
Leadership: The inability to staffgrow enough leaders throughout the organization who have the capabilities to delegate and predict.
Scalable Infrastructure: The lack of systems and structures (physical and organizational) to handle the complexities in communication and decisions that come with growth.
Marketing: The failure to scaleup an effective marketing function to both attract new relationships (customers, talent, etc.) to the business and address the increased competitive pressures (and eroded margins) as you scale.
Verne argues that you have to keep solving these same problems, often in different ways, at different levels of growth (e.g., < $1 million, > $ 1 million, > $10 million, > $50 million) if you want to keep on growing.
I am looking forward to reading what Geoffrey West has to say about scaling up and the "science of cities" and how that might relate to what Verne Harnish, Toby Hemenway (The Permaculture City, 2015), and Richard T.T. Forman (Urban Ecology: Science of Cities, 2014) have to say about these topics.
Another person who is busy scaling up is the Sweden-based farming entepreneur Richard Perkins who shares alot of useful information in his YouTube channel. He has a recent two part video series on how he intends to use lean thinking to help him double revenue while also reducing his workload. I think they offer a useful case study on the type of planning one might engage in to "conquer complexity" to enable more growth and more free time.