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The Newsletter
 
 
FINANCE
Asset Trades Can Pose Accounting Challenges
What is an asset trade? Well, like trading in your older vehicle for a newer model, an asset trade occurs when a business owner wants to trade up to improved technology and a vendor offers trade-in value for the older equipment.

This can pose an accounting challenge. The main issue with asset exchanges is that they differ fundamentally from ordinary business income. Savvy business owners will want professional accounting advice to properly record these transactions in their companies' books.

In a cash sale, the gain or loss is the difference between the book value and the money received. When you receive more cash than the book value, it's a gain; when you receive less, it's a loss.

In an asset exchange, the relinquished asset has a carrying value on the company's books, typically its original cost less allowed depreciation calculated up to the exchange date. The gain or loss is the fair value of the received item minus the book value of the relinquished item.

This is the case only when it is a nonmonetary exchange for dissimilar assets, such as trading furniture for computer equipment. When assets are similar, as is the case for most trade-in events, no gain is recognized from the trade.

In these instances, the gain simply reduces the fair value of the received property. The new asset's book value is equal to the relinquished item's book value, plus additional cash spent. Gain is not realized until a future date when the received asset is disposed of for cash or dissimilar property.

 
HOT BIZ TRENDS
"Watercooler" Moments Are Actually Good for Business
 
Watercooler
You work. You play. You live in two separate worlds that seldom collide.

This was the way it was for previous generations. Today's workforce, however, is introducing a new dynamic; the lines between work and home are blurring.

At the heart of this change is the development of close work friendships. Socializing with coworkers is now more than polite conversations during meetings. Millennials, in particular, are sharing their lives with fellow employees, discussing home as well as work with coworkers as they bike together on weekends.

Why should we care? A recent study, conducted by the O.C. Tanner consulting firm, revealed work friendships can actually be good for business. More than 70 percent of those who reported having best friends at work are happy with their jobs, and three-quarters of those with work besties said they feel confident tackling work challenges. Employees without close friends at work said they are far less likely to feel this way.

To take advantage of the blurring line between work and home lives, businesses may want to create more opportunities for employees to develop at-work relationships. This will look different for each company, but fostering an environment of socialization is the goal. Make meetings shorter and break times longer. Invest in team-building exercises. Create fun spaces in the office where employees are encouraged to gather and bounce ideas off one another.

By creating an environment that naturally cultivates more "watercooler" moments, organizations encourage employees to forge inside/outside relationships. And according to the Tanner study, these friendships will pay off in spades.

 
WORK/LIFE BALANCE
Seeking Balance? Dump the To-Do List for a "Break" List
Work Life Balance
If work-life balance is so important, why is it so much work to find that balance?

Most of us struggle with balance, and in an effort to achieve it, we use a strategy we think will work called the to-do list.

It seems that everyone has one that list of things that must be accomplished in a specified time frame. Perhaps these are activities we choose. Or maybe they're chores foisted upon us by work or family responsibilities. Whatever the case, taming the to-do list is a must-do for most of us. And yet, we don't.

"It turns out that only 41 percent of items on to-do lists ever get done," notes Travis Bradberry, who writes for Entrepreneur and some online magazines, and who also recently coauthored a book titled Emotional Intelligence 2.0. What's more, to-do lists wind up defeating their purpose, says Bradberry: "All those undone items lead to stress and insomnia...Uncompleted tasks will stay on your mind until you finish them."

Swap your to-do list for a "break" list

If it's balance you crave, it's time to schedule downtime. In a recent Lifehacker post, Adam Dachis tells us you can accomplish much more if you "swap your to-do list for a 'break list.'"

Jen Uscher, writing for WebMD, is on the same page. In her article "Five Tips for Better Work-Life Balance," she points out, "Beat burnout by making more time for the activities and people that matter most to you."

Adds Uscher, "Build downtime into your schedule." In other words, put your downtime on your to-do list.

 
FINANCE
Start Planning Next Year's Business Budget Now
 
Successful business owners start planning their annual budget early. In fact, now is the time to start. But relax: It can be a simple task. And when the planning process is wisely handled, the benefits of budgeting will far outweigh the cost of time spent preparing it.

Budgets should not be time-wasting exercises without staying power. To create a useful budget that will stand up through the following year, you shouldn't be spending much time jotting down figures on a page; it's clear thinking that will produce a strong financial model.

Budget according to business type

A budget should be as simple as the business type it embodies. A one-person operation, for instance, will probably have a basic budget that easily adjusts to rapidly changing conditions. A store or company with several employees generally requires a more refined budget. But take note: Detail is not the aim. Your objective is a useful plan.

A business budget is more than numbers on a spreadsheet. Instead, budgeting is a thought-provoking process. By creating a budget, you're quantifying your expectations for the future. The process forces you to predict what's likely to happen as a result of your intended actions. And with a budget, you also calculate the predicted impact of industry trends, demographic changes, and general economic conditions.

Build in flexibility

The simpler your budget, the easier it will be to compare with actual results. And you can always alter the budget for changing circumstances.

Budget planning begins with differentiating fixed and variable costs. Some business costs are fixed monthly amounts, but many other costs are dependent on the revenue you bring in.

When expected revenue changes as actual results unfold, it should be easy to revise the upcoming variable expenses as percentages of sales. Costs directly related to sales volume are either moved forward or scaled back, depending on the way the revenue is going.

With both fixed and variable expenses considered, your other concern is major nonrecurring expenditures. Your budget should give you confidence that spending plans are reasonable based on cash flow. If the budget shows available liquidity, you can plan for major expenditures. As the year unfolds with better- or worse-than-expected results, you can shift these expenditures to occur either sooner or later according to the level of importance you assigned to them.

Think before quantifying

Budgets ultimately save money because they compel you to prioritize. Adjustments to your budget assumptions depend on the thinking you did before you actually began quantifying anything. Although expenses are a certainty in business, cash is a limited resource. Budgeting identifies how much money to allocate for each category of expenditure and tells you when you can afford nonrecurring cash outlays for important but revenue-sensitive items, such as training, new equipment, staff additions, or a special marketing campaign.

Because budgeting entails as much thinking as calculating, it's a wise move for all business operators to begin the mental portion of the process well before the year-end...like now!
 
 
Michele Ball
 
 
 
 
 
Perfect Additions
 
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Worth Reading
"Surprisingly Simple Ways You Can Trick Your Brain into Focusing"
By Gwen Moran
 
Fast Company
 
Multitasking and information overload suppress visionary thinking. Moran's article highlights research by Sandra Bond Chapman, founder of the Center for Brain Health at the University of Texas. Chapman and her team developed a brain training program designed to improve focus, memory, and cognitive function. Mimic the training by reading deeply, taking brain breaks, and being selective about the information you allow in.

"The Value of Grey Thinking"

Farnam Street (blog)

This wise blog tackles the issue of "grey thinking." People tend to view things - issues, ideas, solutions, other people - in black or white. But, this post suggests, reality usually lies somewhere in between.

"The End of Reflection"
By Teddy Wayne


The New York Times

Neuroscientific studies suggest that our device-focused society is hindering our capacity to reflect. Wayne points out that we have retrained ourselves to seek out immediate gratification from our smartphones and tablets rather than actually thinking. The Internet typically rewards speed, a quality at odds with deliberative thought. When faced with the lack of external stimulation, we panic; we've lost the ability to ruminate, contemplate, and consider the possibilities. Introspect now!

LINKS YOU CAN USE
This Month: Walking the Work-Life Tightrope
"How do I balance life and work?" Today's employees face new workplace structures and technology that put increased demands on our time. These links may help you find that healthy balance.

The secret to work-life balance: Give it your all when you work. Give it your all when you rest.
5 Essential Tips for Finding a Work-Life Balance

Get the scoop on how to achieve a healthy psychological balance directly from psychologists who struggle with this issue themselves.
Practitioners Tips on Finding Work-Life Balance

Did you already fall off the tightrope? When things have gotten out of hand, here's how to climb back on the rope.
5 Ways to Reset Your Work-Life Balance

While women entrepreneurs aren't alone in struggling for balance, they often have unique problems in achieving it.
Our Small-Biz "Get a Life" Panel
This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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