Post by RickKen,
In many respects, what you say makes perfect sence, and it is exactly what
I am saying. But it is becoming apparent that you have not taken any
economics, accounting or business-management courses, and that you are
getting hung-up on semantics.
true, i haven't taken any of those courses. and i tend to get hung up on
semantics.
Post by RickIf your boss pays your salary and the cost for you to attend a seminar, or
for doing R&D, and he is also willing to eat some of the lost production
during/after that seminar or R&D, then he will no doubt somehow measure
that cost and the related benefit. If the cost it too high or the benefit
too low (in either the short or long-term, and that can vary depending
upon the nature of the business, the research need, etc.) and he is a good
manager, then he WILL NOT send you to that seminar. The benefit may be
nothing more than making you a "happier employee", in which case perhaps
productivity or ingenuity on the job may increase in the longer-term
(giving the business a competitive edge), or perhaps he can avert a
strike, whatever the reason - that will be the measured benefit. But the
good manager WILL expect a return, no matter what.
the cost being too high and the benefit being too low is two ways to say the
same thing. the real benefit of the seminar may not show up for 6 months, and
it may not show up in anything overtly related to the seminar. so measuring
its value is really tricky.
of course a good manager will expect a return. he may not get it, though, and
that does not prove that he won't get it the next time either. a good manager
can't draw valid statistics from a single case.
Post by RickThe same rules and/or principles apply to both large (100,000+ employee)
and small (one employee) companies - only the one-employee company may not
recognize it as such. But the rules exist nonetheless.
but there are two sets of rules here--the ones you're discussing that apply to
the company as a whole, and the one that applies to each employee, for them to
base their own actions on, for their own benefit. in the case of the single
employee company, the two sets of rules merge to form a whole new set of facts.
to a limited degree, a small multi-person company sees this same effect.
Post by RickWhen I refer to a one-employee company as above, that includes me, since
my company is incorporated and technically I'm an employee. But that also
includes Barry, who if he has not incorporated runs a propriertorship and
so regardless of whether he calls it a salary or a "draw" (the actual
proper term if it is a proprietorship), he is still looking for a return
on his "investment" of time and/or money so he can keep bread and beans on
the table.
exactly what i'm saying, so far as it goes.
Post by RickBy the way, as an aside, Barry appears from an earlier post to be confused
as to whether he is an entrepreneur or a propietor. If he runs a business
of any kind (if he expects a return -cash or other form of renumeration-
on his efforts, whether it be 20 hours per day or 1 hour per month), he is
an entrepreneur. If he does it for pleasure (which he doesn't in the true
sence - he apparently makes some money at it, whether that's enough to pay
for bread, beans or butter too, is another matter), then it's a hobby. If
his company is not incorporated, then he a proprietor as well an an
entrepreneur, in which case at the end of the day (or week, or month, or
year) he makes a "draw" to pay for his beans. If his company is
incorporated, then legally it is an entity onto itself and he is either
its president or CEO or some other type of officer who may or may not
collect a salary or a stipend for doing so, and/or he hire an employee to
do the company's business or he is an employee himself who technically (in
the eyes of the tax-person) collects a salary (whether that be paid at the
end of the day, week, month or year doesn't matter).
you seem to be confused on something as well. it is possible and perfectly
reasonable to be an entrepreneur and a proprietor at the same time, for the same
project, based on your definitions here. except that if it's your sole or major
source of income, then it cannot be a hobby no matter what. go check that
webster's dictionary reference again. heck, i'll print it again:
hobby: An activity or interest pursued outside one's regular occupation and
engaged in primarily for pleasure.
the way you define hobby in the prior paragraph is incorrect. the english
language has no such definition. either announce your definition as being
different from the english language definition or stick to the real one.
to take barry's name out of it and replace it with a generic, if "joe" is making
his only money or spending all or most of his time building hovercrafts, it is
not his hobby. it is his regular occupation. whether he enjoys it or not is
totally irrelevant.
to put it more specifically, if you do not enjoy your job you should be doing
something else. barry seems to enjoy his job, and i know bob windt does. they
also apparently make their only income through the hovercraft industry, which
means that it is a hobby for neither of them.
Post by RickBack to the discussion - if the endeavour does not give a return or has no
prospect of giving any future (near or long-term) return, then it is
either a failed business attempt (the pharmaceutical industry is very well
aware of that - I suspect that only 10% of the drug research programs
yield any viable returns, and I know that the oil & gas industry is aware
of that - they typically see only a 10% success rate on exploration
expenditures, but that's part of the phamaceuticals and oil & gas
industries - high risks, high gains - it's all calculated in their budget
formulas), or it is done for the pleasure or sake of doing it (it is not
tax deductible as a tangible business expense), in which case it is not
business (it's a hobby).
that's my point. someone who owns a one-employee business (or a 12-employee
business) can dedicate a lot of time to research with very little cost if the
paying business is not there at the moment. technically, sticking strictly to
proper accounting methods as i understand them, that time is extremely
expensive. on the other hand if you're at a slow point and time spent in
research doesn't have any other cost by drawing you away from something you
should be doing to make money, then the cost of research drops dramatically.
whether it pays off or not is a gamble. any business is a gamble. my point is
that someone like barry or bob can afford to spend quite a bit of time tinkering
and they very well may make a worthwhile investment in the long run. their time
spent with a few dollars in materials and some possibly good ideas doesn't cost
them that much, but may pay off as though they had spent the money you describe
in r&d.
you seem to think i'm confusing r&d as free. no, i'm not. i realize that it
costs to run a business, and that business has to pay off or it's not viable.
but you're confusing the true costs of research on an individual level.
let me try again. you are running your business as you do now. i'm running my
business, hypothetically. you do not do r&d because it doesn't pay. we each
have 20 hours of work for this week, since times are tough. i make sure all my
business needs are done, then go into the "office" and start tinkering with
things that might improve my business and probably don't cost that much in
materials. i spend 20 hours trying to figure out a thing that might make me
money later, and you spend your time watching reality shows on cable.
technically, neither of us is making money. you, on the other hand, will
CONTINUE to not make money as long as the economy in your area is the same as it
is. i have a chance of coming up with something that i can use later to make
more money.
even if you don't consider it worthwhile to consider that time part of your
business r&d budget, it is extremely worthwhile to the individual, to make
him/herself more valuable either to this company or to the next one.
i could be a minor employee at a large corporation and still find it profitable
to do the same things i'm describing. if you choose well, you increase your
ability to attain whatever goal you're striving for. if my time does in fact
increase my value by some standard, then the time is not wasted.
to a member of a small company, these goals mix. your business is whatever you
can make money at. if barry suddenly discovered that there's a huge market for
sevtecs which had hdtv and surround sound, he would no doubt suddenly acquire
some expertise in that equipment and the particulars of mounting it on a
hovercraft. that would be r&d with a known market. if he had a new idea on how
to make a skirt, he might spend 400 hours fiddling with it and have spent only
$300 in materials outlay in that time. if he had no pressing business
elsewhere, meaning his only other alternative was going fishing, then the time
spent is essentially free.
Post by RickI hope that this helps to shed some light on the matter.
maybe, maybe not. it certainly didn't make me agree with you any more. your
terms make people like bill gates and larry ellison into hobbyists, since they
like their jobs.
microsoft started out in our lifetimes with just a handful of people. if you
think any of those people worked only 40 hours in the week or considered their
r&d time as billable inside the company, then you're sorely mistaken. if they
were salaried, then they were paid a certain amount in order to do their jobs,
and they considered part of that job to be research into ways to make the
company more successful, even if they had already put in 40 hours of regular
time excluding the research.
requiring accounting on time spent to determine worth of research in a small
company is a sure way to a failed business. look at this hovercraft business
you keep talking about, they had a few people and now they're out of business if
i understand correctly. or take yours: you started with several and now
there's only one. maybe if you considered idle time as research time things
might turn around for you. otherwise, you will see the writing on the wall
sooner or later, and you'll have to realize that you wrote it there yourself.
the price for being your own boss is the payment you make in time. if you want
just 40 hours, you should go get a job somewhere for a middle management
position, or better yet where you simply take direction and do your job.