Saturday, July 30, 2011

Time to Learn About The Dunning-Kruger Effect and What It Means

I love political polls, especially the ones that reinforce Jay Leno’s “Streetwalking” segments – in which he asks “average Americans” about basic historical “general knowledge” facts, and they provide him with hilariously loopy answers.

Like “America declared its independence from France in 1865.”

Currently, those “common wisdom” polls suggest that we’re screwed and things couldn’t get much worse and that government is the problem.

Okay, I know.  

Everybody has a lot of stuff going on in their lives.  It’s hard to stay on top of everything.  Sometimes we just have to trust the folks that we figure are the experts. We can’t know everything. Simple is best.
But there are some things WE KNOW!

We KNOW that politics and politicians are all childish, evil and bad.  And government costs too much.  And taxes are evil.  At least, that’s what they say on TV, anyway…

So, when something really important comes along – say, like electing somebody to Congress or running the government – we tend to gravitate to candidates who we think actually THINK like us.  Chances are, they’ll represent us and our view of reality and do the Right Thing. 

This, of course, may be a tremendously bad idea, especially if we haven’t been paying really close attention to what’s been going on. Like The Issues.

Listen. There are lots of politicians out there who use the phrase “the American People” followed by verbs like “think”, “believe”, “want”, “expect”, “have said” and other similar nonsense.   Next, they’re happy to tell you that “the American People” (for whom they say that they speak) are damn near infallible on virtually every imaginable issue when they think collectively.

It's kinda like having a 330 million person Pope...gifted with infallibility.
Think about it – according to these folks, “American Group-think” is always right…which, of course, is why lynchings of blacks made so much sense in parts of the 1920s Deep South.  Local group-think indicated that was the way to go.  It’s hard to argue with majority opinion, after all. 

So…Everybody knows you can’t spend more than you have. That’s just common sense.  Or “group-think.”

Of course, if you ask those people if THEY should pay cash on the barrelhead for their $350,000 houses and thus be mortgage free or pay cash up front for their children’s college tuitions, - no mortgages or no college loans - they’ll look at you like you have three or four heads.

Apparently, that’s a different kettle of fish.

Problem is, most folks don’t know that all this “knowledge stuff” has already been studied by experts (Justin Dunning & David Kruger) who actually DO know what they’re doing.  In fact, they’ve gone so far as to lend their own names to their findings.

It’s called the “Dunning – Kruger Effect.”  You can read about it here, in a “Psychology Today” article published last year.  

In a nutshell, the “Dunning-Kruger Effect” posits the following:  If you’re really, really stupid, you’re probably too stupid to know just how stupid you are.  You are confident that you have a lockhold on The Truth.

You may actually believe that NPR, foreign aid and health education collectively soak up huge amounts of your tax dollars.  But, of course, they don’t.  And you probably have no idea how to find out how much they actually are – in real dollar amounts.  And I’m not going to tell you where you can find out …

Admit it, if this is all too hard, you’ve been watching “American Idol” a lot…

Therefore, you might think (incorrectly) that you actually understand what’s going on around you, when, in fact, you don’t.  Inevitably, you’re probably convinced that you understand the situation, even though you couldn’t explain it to an alien from Mars, except by using the current buzzwords being used by those TV pundits who keep telling you that (a.) you’re smart and (b.) they can tell you what you should be thinking.

Worst of all, people suffering from Dunning-Kruger truly believe they have “The Answer.”

Politicians learned years ago that it’s always a good idea to tell you – the voter -  just how smart you are.  The more they tell you that you’re smart, the more you’re inclined to agree with them.

And, if we can distract you with a few “hot-button” issues – Casey Anthony, Maria & Arnold's split, Amy Winehouse, America’s Got Talent, same-sex marriage – so much the better.

Interestingly, nobody in elected office would ever suggest that you’re suffering from “Dunning-Kruger”, even though their staff aides already know just how easily you can be manipulated with a couple of “feel-good” buzzwords. 

Face it, you really, really like it when politicians tell you that you’re smart, even when you’ve never heard of Ludwig Van Mises and the Austrian School. If you had to explain Ayn Rand’s economic philosophy, you’d likely be at wit’s end, even when the guys promoting it say it’s the bee’s knees and you’re inclined to believe them. (If you’re not sure about those things, try Google…)

Politicians’ staffs understand the Dunning-Kruger effect; in fact, they rely on it.  Chances are, if you suffer from it, you don’t have a clue. 

Buzzwords sound good, and complex ideas seem understandable, especially if they’re reduced to buzzwords, which are the linguistic equivalent of the “lowest common denominator.”

Still, when it comes to making a choice about the future, I’m inclined to trust in the truth of Dunning-Kruger, not buzzwords.

And I’m not really all that fond of that “common wisdom of the American people” thing.  I’ve seen where that’s taken us in the past.

Friday, July 29, 2011

Way Back When the King of the Wild Frontier Was Jilted in Tennessee

When I speak about the importance of obscure local government records in my “Board of Supervisors” talk– the kinds of records that are rarely microfilmed and generally don’t turn up on the Internet – one of the things I talk about are the records relating to “near marriages” – those “almost weddings” that were planned, but never happened for one reason or another. 

That’s where one of the parties got cold feet, usually right before the ceremony but after the license was obtained.

For example, let’s suppose that “Mary and John” – prospective life partners - get themselves a license to marry in the appropriate local government office in 1868.  Mary – who turns out to be the archetypal “runaway bride” - has second thoughts about John. 

Mary says, “Thanks, but no thanks” and leaves John at the figurative altar.

Folks tend to forget that those marriage license applications are part of the public record. Even when the marriage itself never took place,  the license applications are great informational fodder for genealogists, since they contain the same background info about each of the parties, even though there was no wedding.  Generally, they’re overlooked, because they tend not to make it into the indexed marriage records.  The “Mary-and-John marriage” never took place, so it’s not a “marriage record”, obviously. 

Think about how many of your great-great maiden aunts might have had second thoughts and changed their minds before the deed was done…

Still, these records – often stuffed in out-of-the-way places in city and county clerks’ offices – may contain useful genealogical information. Genealogists need to be aware that such things exist  -often in the form of “loose papers” - and are part of what we sometimes call “the public record.”

Here’s an interesting news story about one of those “almost” marriage records – featuring none other than Davy Crockett – “King of The Wild Frontier” and best remembered today as a prominent Alamo-Person, not as a spurned bridegroom. 

The story is all about who owns what when it comes to government-produced paper and whether governments ever throw out stuff they think is “unimportant.”  Or whether government workers ever walk off with stuff.  There’s even a replevin lawsuit, now finally decided – just to keep things interesting!

When you read the story (and if you’re old enough to remember) try NOT thinking about Fess Parker and NOT humming the theme song to the famous TV series that started:

Born on a mountain top in Tennessee,
The greenest state in the land of the free,
Raised in the woods so's he knew every tree,
Killed him a b’ar when he was only three.

Thursday, July 28, 2011

The Unplanned and Unintended “Part Three” of the “Dollars and Sense” Series

I really didn’t plan on writing this when I started the “Dollars and Sense” posts a few days ago, but then I read this Yahoo News article (see link below) ...

Everybody knows how credit cards work  -  or do they?

So, to correct that apparent injustice, they’re rolling out a new merchant fee structure and introducing something called a “merchant participation fee”, the details of which are still sketchy at best.  We’ll have to wait until our credit card processor fills us in on the specifics.   

Chances are, no matter what they’re planning, it will cost us a whole lot more to accept and process customers’ credit cards.

But hey, it’s only fair.

After all, to keep it in perspective, VISA, with its earnings up by 40%,  just reported a third quarter NET income of ONE BILLION DOLLARS, which comes largely from the interest customers like you pay and also from the fees paid by merchants like me.

I figure now is as good a time as any to clue you in on how credit cards actually work – if you’re a merchant.

Sure, as a consumer, you already know how credit cards work.  The bank sends them to you.  You use them to buy stuff.  The credit card company/bank sends you a bill every month.  If you’ve racked up, say, $2500.00 in charges, they ask you to pay them at least about $26.00 for that month.  Part of that payment goes to repay a small part of the $2500.00 you owe them.  The rest is interest, which might be somewhere close to 25% a year.  Simple, right?  

And if you pay the monthly minimum and never charge anything else on that card ever again, you’ll pay off your $2500 debt in about … 23 years.

Then there’s all that great stuff the credit card company gives you for “free”, like the “points” that you can use to buy even more stuff.  Or apply toward airline miles. Or whatever.

I’ll bet you think that the credit card company is giving you those great points because they value your business, right?  They’re willing to dig down deep into their corporate pockets and forgo part of their income to keep you fat, loyal and happy, right?

Well, no, actually.  

Merchant fees – the fees that the credit card companies charge retailers – are the main source of the income that lets the credit card companies look like the “good guys.”  It doesn’t cost them anything.  Merchants pay for your “perks” through the fees that they pay to the credit card companies. And much as booksellers might like to pass part of those additional fees on to you, the customer  -  they can’t.

That’s because it’s the publishers who set the prices of books, publicize them and usually print them somewhere on the book. It’s well-nigh impossible to convince a customer that it’s a good idea for them to pay $22.50 for a book whose price of $21.99 is plainly printed by the publisher on the cover.   

Further, merchant contracts with the credit card companies explicitly state that customers can’t be charged any additional fees or higher prices when they use a credit card.  So, out of necessity, the bookseller/merchant absorbs the fee as a cost of doing business.  In pretty much every other part of the world of commerce, those little credit card fees get passed along in the form of slightly higher prices.

Not so with books or pre-priced book-like things.

Really – you didn’t actually think a big company like VISA was going to surrender any part of their 2011 ONE BILLION dollar third-quarter net profit just so you could get some frequent flier miles, did you?

(Yeah, that's right . . . a PROFIT of ONE BILLION DOLLARS in THREE MONTHS . . .)

Here’s the scoop – when you use your card to buy something, the merchant who accepts your card will pay a whole series of fees to the issuing credit card company.  The first fee is called the “discount rate”.  It’s a percentage of the total sale, sometimes as high as 5%, depending on the kind of business it is.  That’s because some kinds of businesses are considered by banks to be “riskier” than others and attract a class of “risky” customers who tend not to pay their bills.

The next fee is called the “interchange fee.”  This is a fee you’ve probably never heard of.  It’s usually a fixed amount plus a percentage of the total sale that gets split by the customer’s bank and the merchant’s bank. These fees are complex and vary by company size, geography and a number of business conditions.   

Then there are “batch processing fees” that a merchant pays.  Don’t forget the “minimum monthly fee”, for those months when sales are light.  And the “monthly statement fee.” There are several other “nickel and dime” fees as well. 

The merchant also pays the same fees on any sales tax that gets added on, even though that money gets sent to the state. That’s right – on a credit card sale, we actually pay a fee to banks to collect the sales tax that our customers owe to their state and local governments.

And, as a point of information – we don’t “charge” sales tax; we simply collect it, as the unpaid agent of state government.  We don’t have a choice in that.  We’d be in deep weeds if we didn’t.

For small businesses, all these seemingly tiny fees add up – often to as much as 7% – 10 % of the total sale.  

Now, the good folks at VISA are suggesting this is still not quite enough.

After all, the nice gentleman who is the VISA CEO only made $12,914,881.00 last year in salary, stock options and other goodies.  Apparently, he’s one of those “job creators” we keep hearing so much about lately. Apparently, they’re the ones who are taxed enough already and will start firing people if they have to pay a penny more.

By the way, there are a few other “interesting” pieces of credit card information you may never have heard of.

For example, merchants who accept credit cards cannot set a “credit card minimum” for purchases.  If a customer wants to use a card to buy a 50 cent item, the merchant is obliged by credit card company contract to accept the card for payment.  The merchant will then pay about 35 or 40 cents to “process” the 50 cent charge because of fixed minimum processing fees.  Merchants who put up “Minimum Credit Card Purchase - $25.00” signs are in violation of their contract.

Moreover, in states like New York, state law prohibits merchants from asking a customer for additional identification, like a driver’s license or a phone number. Merchants therefore must assume the risk that the card is neither stolen nor maxed out, since only the name of the customer – as it appears on the card - is known to them.  Neither MasterCard nor VISA will release the address or phone number of a deadbeat customer to a merchant; that would be a violation of credit card company policy.

So, we’ll just have to wait to see exactly what the “adjustments” that VISA has in store for us actually are. 

That’s what’s great about being a “really small business” – you’re the total master of your own destiny … maybe just like the "12.9 Million Dollar Man" at VISA.

The sarcasm is, of course, intended.

Wednesday, July 27, 2011

The Dollars and Sense of The Genealogy Book Biz - Part Two

There’s one nice thing about books.  

They’re very, very smart and very, very talented.  

You see, books can order themselves from the publishers.  Books can unpack themselves and jump straight up on the storage shelves.  When it comes time for a conference, books can select themselves, put themselves neatly into boxes, magically cause those boxes to load themselves in to the vehicle and then magically drive themselves to the conference venue, all while Mrs. Bookseller and I snooze in the front seat.

Then, once we’re there, those darling little books unload themselves, find their way to the right room inside, set up the tables and arrange themselves.  

The best part?  

The books can write their own receipts, and jump into the customers’ bags, all while we booksellers go off and party elsewhere.  When the conference is over, the books dutifully repack themselves, load themselves into the vehicle, get themselves home and climb back on the shelves, like so many good little children.

Next, my trusty book gnomes take over.

The gnomes call in the credit card slips, prepare the bank deposits, remove the “sold” items from the electronic inventory & website and do all the necessary accounting and book-keeping, including the preparation of state sales tax reports, etc.

That’s the great thing about the genealogy book biz – once you train your books to order, pack and sell themselves – kinda like Disney’s Sorcerer’s Apprentice – and once you get the book gnomes to do the rest of the work for free, it’s all gravy. 

Yup. Running a book biz is a piece of cake.

Of course, if the book gnomes get sick or go out on strike and if the books forget everything you’ve taught them, you’re back to the Square One – a place that’s better known as “Reality”.

Now you’ll need to do all that packing and lugging stuff by yourself.  Now you’re a bookseller in search of “billable hours.”

Unless, of course, you believe that your time has no value whatsoever.  More often than not, that seems to be the case.

Last time, I discussed the basic profit/loss of bookselling by simply using the simple hard “cash” numbers from the event we did last Saturday, just as though the actual work was all done by unpaid gnomes, by the books themselves or by smoke and mirrors.  In other words, I wrote about the financial “bottom line” of bookselling as though everybody worked for free.

Today, I welcome you to another reality.  

Observation: It takes a whole lot of time to sell a $9.95 book and make what appears (on the surface) to be a $3.50 profit.

Here’s the analysis of the “time/labor cost factor”, using last Saturday’s event as the example:

In order to exhibit last Saturday, I had to have the books on hand in the first place and then I had to select the lucky ones that got to go on a road trip to Massachusetts. And then I had to pack them.  And then, Pat had to pack the display stuff, table covers and ‘basic business” stuff, like receipt books, credit card slips and bags. And then, it all had to go in the vehicle, get to Waltham, get unpacked, set up, repacked and unloaded and re-shelved.  

Time involved in all that?  About 9 person-hours combined.  Not a huge amount – but wait…

Next – the travel:  two of us spent a combined total of 14 person hours driving back and forth from NYS to Waltham, then back to NYS.  While not very strenuous, time is time.

Then there’s the event itself.  Two of us were there from 7:30 AM till 4:30 PM.  That’s a combined total of 18 person hours of “floor” time in the vending area.

The “post-event” book-keeping took about 3 hours. 

Bottom Line: about 44 person-hours were spent by two people preparing for, traveling to, staffing and accounting for the event at Waltham last Saturday.

So, now the question arises:  how much is a bookseller’s time worth to do all of the above?  Say, for the sake of argument, that it requires virtually no skill or experience – just a strong back.  Let’s peg it at about $10.00 an hour; if you could hire a couple of high school kids to do all of the above, the “labor cost” of exhibiting would be about $440.00.  

If, however, somewhat more skill was involved, and if $20.00 per hour was a reasonable rate, then $880.00 would be about right.  

But who actually pays the bookseller’s salary?  Answer: the bookseller pays himself or herself, out of whatever is left over after expenses are subtracted from gross sales.  Remember, the bookseller’s salary has to be covered by the net profit generated from sales, if exhibiting at the event is going to make any economic sense at all.  “Economic sense” is the same thing as “salary and maybe even a little profit.”

So, now, if we factor in the actual net loss of MINUS $6.88 (see previous post) from book sales and my speaker’s honorarium combined at the Waltham event with the cost of “labor”, using either the arbitrary $440 or $880 amount above, it becomes abundantly clear that this was not a moneymaking event for us.  

No salary for either one of us, or any business profit, at least not this weekend.  In effect, we worked for free.  Sometimes we do.  Sometimes we don’t. 

Was that the plan in the beginning?  Well, no.  

But then, that’s the nature of this kind of business; it’s all about taking calculated risks, and investing both time and money in the expectation of (a.) covering expenses, (b.) paying yourself for your time and (c.) maybe even making a small profit.

How much actual “working capital” is at risk, in addition to the expenses I wrote about yesterday?  

That depends on how many books a bookseller like me has on display at any given event. Last Saturday, for example, I started the day with about $5,000 of “bought and paid for” books.  I own ‘em.  I paid for them when I bought them from the publishers. They’re not returnable.  No cash comes back to me until I sell them. 

If I had calculated that a larger crowd was likely, I would have packed proportionally more books, thus increasing the “at risk” capital to about $7,500 worth of already-paid-for books.

At large conferences, like NGS, FGS and NERGC, we often have as much as $30,000 - $50,000 worth of books on display. Since they’re all bought and paid for, they represent rather a lot of our working capital at risk.  (By the by, if I sold two books every day of the year for the rest of my natural life, I’d need to live to be well over 100 before the books in our current inventory would be gone…even if I never bought another book for re-sale.  Ain't gonna happen!)

As you can see, everything about the book biz is unpredictable and highly risky.   

  • Will enough people show up to the event? 
  • Will there be enough time so that attendees can actually browse the stuff on the tables? 
  • Will there be too many vendors for the number of attendees? 
  • Did I bring the right stuff?   
  • Will I get a “bad” check or “bad” credit card and thus have to absorb a significant loss on that purchase? 
  • Will someone pick up a book and “forget” to pay for it? 
  • Will someone browsing inadvertently spill their coffee all over a stack of books, thereby ruining them?

But, if it’s so risky and unpredictable, why do it? Why not take that working capital and invest it in something safe, like, say, Afghani government bonds?

Because, like most booksellers, I suffer from what is often described as the “gentle madness.”  I love everything about books, from the look of a well-composed printed page to the feel of the paper to the content of the author’s thoughts and words. Plus, I like to teach and expose people to new ideas and the wonders that can be found between the covers of a printed book. 

More to the point, I believe people should own actual books, not simply electrons dancing on a plasma screen.  (I still own the very first out-of-print book that I ever bought: a leather-bound and Paris-printed early edition of Charles Baudelaire’s Les Fleurs du Mal, that I bought when I was 14.)

I don’t believe that you can Google everything, and even if you could, I don’t think you should. And Wikipedia is not a replacement for the 11th edition of the Encyclopaedia Brittanica, not even close.  (And, if you don't know why I singled out the 11th edition of the EB, it's time to chat up your friendly neighborhood reference librarian - preferably one over 55 - and learn about it.)

Plus, I also think that there’s a huge difference between selling books like so many potatoes (that’s what Amazon does) and being a bookseller.  In a way, it’s much like the difference between downloading stuff with abandon from World Family Tree and being a genealogist.

Okay, so I didn’t make a killing at the MGC Conference last Saturday.  No big deal.  It was my choice to attend and my choice of risk.  I had fun.  I got to teach. I met friends and had some great conversations.  I'd do it again in a heartbeat.

Besides, in the end, life is short.  And there’s always a "next time" to try and make up for the last time.  

At least, that's what booksellers tell themselves in their dreams...

Tuesday, July 26, 2011

The Dollars and Sense of The Genealogy Book Biz - Part One

This past Saturday, I spoke and we exhibited (as Jonathan Sheppard Books) at the Massachusetts Genealogical Council’s annual all-day event held at Bentley University in Waltham, MA.  There were four great tracks of four lectures each, plus a lunchtime presentation by Eric Jay Dolin on his current book titled “Fur, Fortune and Empire: The Epic History of the Fur Trade in America” Close to 130 dedicated genealogists spent the day there, and, with any luck, went home happy.

After visiting the grandkids up the road a piece for part of the day on Sunday, we headed for home over the back roads of northern Massachusetts, thus avoiding the mania that is summer traffic on the Mass Pike. On Monday, we unpacked the vehicle, offloading books, hand truck, bookcase, and assorted display paraphernalia. Today, we did the book-keeping.  

That’s when we find out what really happened, business-wise.

Generally, and for lots of reasons, people who run small businesses are pretty close-mouthed about their finances. However, considering the great interest among many genealogists in discovering ways to “monetize” their hobby, I thought I’d provide some detail about running a genealogy book business, something that we have more than passing familiarity with, since we’ve been doing it since 1977.

So, for the record, and for those who are trying to figure out how to make a living from genealogy, here’s how this most recent event worked out:

1. First off, you must remember that, for booksellers, there’s a huge difference in numbers between “gross sales” and “net profit”.  Yeah, it might look like we're busy and selling lots and lots of books, but the money we take in - we don't get to keep most of it.

 For example, when we’re selling new books, we buy stuff directly from publishers for re-sale.  Some publishers give us 40% off the cover price of a book.  Others give us 20%.   In all cases, we pay the costs of shipping the books to us as well.  So, on a book priced at $19.95, we might make between $4.00 and $8.00 before the cost of postage, which usually reduces the profit by another 5% or so. 

So, when we tallied the sales from Saturday and added in my honorarium for giving a talk, and then subtracted the cost of the books and the shipping costs to get them to us, we had a “profit” of $429.00. 

However, since most folks paid for their book purchases with credit cards, and since credit card companies and banks take a portion of each charged sale, those credit card fees reduced our “profit” to $397.00.  Sure, our “gross sales” were much higher, but most of that went to pay the publishers and the bank fees for the credit cards. 
Bottom line on “INCOME”:  $397.00 to the good, ... before factoring in actual conference expenses. (Hint: those are the actual costs of “being there”)

2. On the “expenses” side, booksellers need to be realistic and accurately account for actual travel costs.  For example, because Waltham is 150 miles from home (or 300 miles round-trip), it’s not realistic (at least for us old folks) to think that you can spend three and a half hours driving there in time to set up at 7:30 AM in Saturday.  Hence, you go the night before and stay in a motel.  Likewise, it’s just not realistic to think that there will be any gas stations along the route who will say, “Oh, you’re going to a genealogy conference? Well then, YOUR gas is free!” Our Saturn Vue gets about 24 miles to the gallon, so it takes about 12 gallons minimum to get there and back.  

Then there’s prorated oil, tires, insurance, registration, maintenance, etc.  When you add it all in, the allowable IRS rate of 50 cents a mile is pretty close to the actual cost of driving. (Another Hint: IRS does not over-estimate costs…)

Therefore, in order to speak/exhibit, I need to account for and cover all those travel and overnight costs. (P.S.: the costs for post-conference Saturday night are not included, nor is the extra mileage cost to visit the grandkids; only the actual “conference costs” are shown here.

But we’re not quite done.

3. At national and regional conferences, vendors must factor in the costs of exhibit space. Even when the charge for space is small, there may be a conference registration cost. Last Saturday, the cost for two registrations at MGC was $130.00.  That was quite reasonable, considering it included breakfast, lunch, parking and admission to all the talks.  For the cost of two registrations, I got ample table display space.

And, yes, it actually takes two of us to do this, because the actual time allotted for sales is small, and EVERYONE wants to pay for stuff at the same time.  No way one person could handle it.
Should vendor space at small conferences be free?  Resoundingly, no!  Why not? Because this is not charity.  Ultimately, space costs somebody something.  If you’re running a business, get used to paying for space.  Even your “home office” has a cost associated with it.  There’s no “free space” at large conferences, like NGS, FGS or NERGC.  In fact, in the real world, space at genealogy events is about as cheap as it gets.  

Again, if you’re a vendor, get used to paying for space.  Even if the space is “free”, buy a conference registration for each one of the people it takes to staff your space.  Otherwise, you’ll have no idea if you’re actually able to make a living at what you’ve chosen to do. 

Plus, it’s costing the conference organizers something.  Help pay for it.  Plus, if you agree to exhibit, do us all a favor and actually show up, even if you’re a small society that depends on volunteers.  

Bottom Line on the EXPENSES side:  Total mileage, motel and registration costs in lieu of “booth rent” -   $403.88 in actual costs to speak/exhibit at 2011 MGC event.

Profit/Loss?  Overall, a slight “loss” of $6.88 to Mel Wolfgang AKA “Jonathan Sheppard Books”.

Yup.  That’s the bottom line for the weekend.  The bank account is $6.88 lighter than it was on Friday morning.

But wait . . . you will note that there’s been no mention of time – what professional genealogists, lawyers, plumbers and other self-employed types might call “billable hours.”

Today, it was all about the “cash.”   Next time, I’ll talk about the time factor involved in this kind of genealogy business.

As they say, time is money, and the sooner you factor that in, the more realistic you'll be.

Wednesday, July 20, 2011

When The Taxman Cometh

There’s an interesting conversation going on today over at the Association of Professional Genealogists (APG) member listserv about the need for professional genealogists to collect (and remit) sales taxes on professional genealogical “services.”  Last year, New York State, and specifically the Department of Tax and Finance, made it almost clear that “genealogical services” were sales-taxable.  There are still some shaded areas to be worked out, but that'll take time.

In other words, if you run a business in the State of New York, and that business does genealogical research for paying clients, then that business is in the “information services” business.  That means, plain and simple, that the bills that get sent to clients for research need to have NYS sales tax added to them (both state and local.)

But... but... should a state like New York be forcing “mom and pop” genealogy businesses to collect sales tax from their research clients?  After all, it’s a professional service.

Turns out, that’s the wrong question, because it doesn’t matter.

It’s just like selling books.  Whenever we send a book to a New York State address, the law requires us to collect the appropriate state and local sales tax, not only on the price of the book itself, but also on the shipping costs. 

That’s the law in New York State.

Of course, we also have to file periodically – usually quarterly - with a bunch of other states where we are required by law to have sales tax permits. It’s one of those costs of doing business that nobody ever thinks about when they hang out their “open for business” shingle.

Of course, nothing is ever simple.  You can’t just start a business doing research for clients, add the appropriate sales tax to your client’s bill, collect it from your client and then send it the State of New York.  Before you can do any of that, you need to register with the State Department of Tax and Finance as a business, get a “tax number” (also known as a “Certificate of Authority”), and only then can you collect and remit the tax to the state.

(Personal aside: a few years ago, New York State wanted all those of us with “old” Certificates of Authority to get “new” Certificates of Authority.  There was a $50 fee for that…)

Note that State tax people tend not to kid around.  The NYS Department of Tax and Finance makes it crystal-clear on its official website what’s likely to happen if you fail to register:

If you are required to register for sales tax purposes but fail to do so and you operate a business without a valid Certificate of Authority, you will be subject to a penalty. The maximum penalty for operating a business without a valid Certificate of Authority is $10,000, imposed at the rate of up to $500 for the first day business is conducted without a valid Certificate of Authority, plus up to $200 per day for each day after.

Of course, they wouldn’t do that to little ol’ you, right?

Welcome to the “Cautionary Tale About Sales Tax Collection”:

More than 30 years ago, I sub-leased about 200 square feet of not-so-great retail space from a friend who had just started a retail business and was selling all kinds of interesting jewelry, clothing and other objets d’art made in Asia.  I used the space to install about 15 six-foot bookcases, stocked with interesting and unusual (non-genealogical, non-historical) books. Art, science, medical history, that sort of thing.  The arrangement was simple:  I paid her for the space (and a bit extra) and she agreed to handle the sales of the occasional book, using my receipts, etc., just so it was clear that it was two separate businesses.

This all lasted for about six or so months.

Then came The Day.  The day that I found out that my friend was collecting sales tax from HER customers for HER stuff, but not sending any of it on to the State of New York.  (Because we used separate receipts, my stuff was properly accounted for and I paid the state directly.)

However, that didn’t stop the NYS sales tax agents from visiting the shop one morning, padlocking the doors and plastering huge bright orange stickers with the words "SEIZED BY THE STATE OF NEW YORK FOR TAX VIOLATION" all over the display windows. 

It took lots of calls, document production, and smooth talking to convince the tax folks that there was no problem with the thousands of out-of-print books in the bookcases and storage boxes (mine) in the two hundred square feet in the back.  My book business was current with sales tax filings. Finally, an agent allowed me inside to retrieve my stock and my bookcases.

My friend’s merchandise, however, ended up being sold at a tax auction for pennies on the dollar.

The moral here is simple:  no matter what your personal beliefs about government or taxes, if you run a business, it’s your responsibility to know what’s required in your state and then, to do what’s required.

Sure, it may not seem logical or fair.  Doesn't matter.  No question, it complicates your life.  Doesn’t matter.  If you mess with the tax folks, there’s a very high likelihood you will lose - big time.

These days, states are broke and looking for revenue sources. “Information services” businesses are easy targets when states are looking for new taxable services.  Genealogists research and sell information to clients.  Ergo . . .

If you do this sort of thing, it’s a good idea to find out if the service you provide for a fee is taxable in your state.  Here’s an interesting “advisory opinion” from the State of New York tax people about the tax-ability of “information services.”  (Not “genealogical – but close enough for government work…)

When it comes to collecting sales tax, you need to be on top of stuff like this if you run a business, not only because it is the law and you’re responsible for knowing what it is, but most of all, because –

Bright orange “tax violation” stickers on your place of business 
are not good advertising for your business skills!

Sunday, July 17, 2011

Some Final Thoughts on Cataloging The Family Stuff

Earlier last week, I was discussing the importance of cataloging and identifying family photos, documents and artifacts, primarily to ensure that they didn’t end up in the landfill because nobody knew exactly what they were.  And why they were important. 

I described and illustrated my “quick and dirty” database, maintained in an Excel spreadsheet, and also the single-sheet MS Word document that I used to record each individual item, with a scan or photo of the item and imbedded in the document above the text.  I noted that the text was a template of key data elements and was designed to follow a formula to capture the essential descriptive data, thus making stuff easy to identify and find.

When I interjected a new topic (the theory/history of memory)  into the last post, I intimated that I would return to the earlier discussion and talk about the importance of using a “controlled vocabulary”.  Even earlier, I suggested that I’d describe what I was doing with all those single-sheet pages that described the stuff in the collection.

First – the sheets.  The sheets get punched for a three-ring binder and then filed by number.  That’s the “inventory number” assigned the day the item was cataloged that was described in the earlier post.  Why this way? Because I figure that if someone picks up a photo and has no idea what or who it is, it’s easier to find out about it by looking at the inventory number in pencil on the back and then matching it with the number in the loose-leaf binder.

Plus, by using the Excel database, I can sort all the photos, documents and/or artifacts that referenced any specific family, locate the inventory numbers, and quickly find the inventory sheets that describe each item and identify the storage location.  (Note: the database does this too, but the sheets in the binder have a picture as well.)  

Plus I can sort and print indexes sorted all kinds of ways till the cows come home.

Why not keep it all in an electronic database and save the trees?  Simple.  I believe in the Luddite version of LOCKSS” (Lots of Copies Keep Stuff Safe).  Printed sheets in a loose leaf binder tend not to crash, become corrupted files or get lost in the cloud. They don’t take up a lot of space. I don’t worry about power failures, or having the right software to read the files.  It’s all  pretty simple.

As you might have guessed, I also like KISS, too.  That’s “Keep it simple, stupid” in case you forgot.

Now, about that “controlled vocabulary” thing.  

By building a glossary of terms and defining them, you’re building a controlled vocabulary.

For example, it makes your cataloging and sorting life easier if you can always sort on the same terms.  Let’s take pictures.  What will you call them when you enter stuff in the database? Photos?  Photographs? Snapshots? Ambrotypes? Polaroids?  It doesn’t truly matter for a home database, but even there it needs to be consistent if you expect to retrieve the data in a simple search.  In this case, “consistent” equals “controlled.”

Sometimes, you’ll want to search on a broad term and sometimes on a very specific term.  Here’s an example:  In your collection, you have a large, wide-angle picture of your great-grandfather in evening dress, celebrating at a dinner with about a hundred of his lodge brothers in 1918.  Sure, it’s a photograph, but can you “fine-tune” that?

Actually, that kind of photo has a very specific name. 

If you want to see how this works in the archives/library world, here’s the link to the Library of Congress website that describes their “Thesaurus for Graphic Materials II”  (known as “TGM II”).  Cataloguers in archives and libraries use this site a lot, and you can, too. 

Enter “photo” in the search box, and when you get to the page, scroll down to “photographs”.  

Behold! The image you’re describing is called a “banquet camera photograph” and if you click on the hyperlink, you’ll find a very specific definition. [Photographs made from a fixed wide-angle-lens camera capable of producing a sharp image of great depth. Usually photographs of large groups of people. One camera, marketed 1913-1926, produced prints of 7 x 17 in. (18 x 43 cm.) and 12 x 20 in. (30 x 51 cm.).]

By using that very specific term in your item description, you will (a.) learn it and (b.) be able to retrieve it with greater ease and precision when you go looking for where you stashed that photo.

Yeah, I know you’re not the Library of Congress, and your collection of family stuff pales in size by comparison.  But that’s no reason not to do a good job of cataloging in the first place.  As your collection grows, using a controlled vocabulary will make your life a whole lot easier in the end.

More important - you'll be writing metadata. 

That’s it for now on cataloging –slash – inventory hints.

Thursday, July 14, 2011

Why Bother To Remember Anything Anymore? Look It Up on Google!

I had other plans for this space today (more on being a “home archivist” and specifically on controlled vocabulary) but that can wait a day or two.  This topic just popped in for a visit and was too serendipitous to pass up.

I’ve been reading Joshua Foer’s new book called Moonwalking With Einstein: The Art and Science of Remembering Everything.  Foer, a science journalist who decided to compete in the U.S. Memory Championship a while back (you didn’t remember that there was such a thing, did you?), wrote about training for it.  A lot has to do with assigning really weird images to specific things you’re trying to remember – hence, the title, Moonwalking With Einstein.

Here’s a link to his YouTube video discussing his book and his experiences. The book is more than just his “training” experiences.  It is, in effect,  a "history" of what we call memory.  

Memory, it seems, is highly trainable.  According to Foer, it’s a learned skill, kind of like learning to play poker or bridge.  A millennium or so ago, people did it routinely and quite well.  Then Gutenberg came along with his movable type thingie and screwed everything up. 

Now, people could write stuff down and get it printed.  No more having to remember everything, like those songs and fables and the Norse Eddas and those interminably long Celtic genealogies. Books made memory - as an information storage system - almost obsolete. 

Libraries and archives became the cultural “memories” of our civilizations and librarians and archivists became the guardians, field guides and sherpas of all that stored information.

As long as you knew where to find it, you didn’t need to remember.

Then, today, the good folks over at Ars Technica, - which, by the way, is a great tekkie journal, - released an article by Kyle Niemeyer titled “Study: why bother to remember when you can just use Google?”  

Niemeyer draws your attention to a just-released study in Science Express that describes four interesting memory experiments.  The experiments strongly suggest that people with easy electronic access to many sources of information (the internet, experts, Google, etc.) develop what is called “transactive memory”.  In other words, they remember less, and instead, remember where to find stuff more.   

Moreover, if people think that there’s no easy access to particular bits of information or if something that’s on their computer is likely to be erased, they tend to remember it more readily than those things that they know they can easily look up.

Niemeyer’s observation:  our brains adapt to technology, not vice versa.  And that may not always be a good thing, especially when it’s so easy to look up facts in isolation.  After all, facts are not knowledge.

For example, there’s a huge amount of distance between simple fact recall from memory and complex understanding.  Part of understanding is related to seeing how things go together and being able to figure out why that is so. And one of the key elements to all that “figuring out” part is having a brain full of “working knowledge” all neatly stored in memory and ready for our instant, nearly intuitive recall.

Knowing that Albany is the capital of New York is look-uppable.  Knowing how that came to be and knowing why it’s not Kingston takes a bit more work and an understanding of New York State history. That’s the stuff that gets stored in our “working knowledge” memory, because if it wasn’t, we’d be forever looking stuff up.

That’s why memory is so intriguing.  It’s where we keep our personal stash of “working knowledge.”  All those tens of thousands of factoids we’ve collected over the years are interesting, but it’s our “working knowledge” that makes them useful.   The “working knowledge” is rather like the grammatical understanding of a new language that makes its vocabulary useful.  Owning a Swahili dictionary does not make you a native speaker of Kiswahili and won’t do much if you’re calling room service in a local hotel on the Kenyan coast.

Similarly, amassing a collection of names and dates for unsourced internet family trees does not make you a genealogist, even if you can recite most of those names and dates from memory. It helps to have an understanding of “family”, which is a whole lot more difficult to acquire and remember. 

And for the genealogist, it’s all about finding out all those facts that our ancestors stored in their working knowledge but just forgot to pass down to us. After all, there’s a very good chance that your “brick-wall” ancestor knew where he or she was born and who Mom and Dad were. 

Now, if we could only access some kind of "genetic memory"...

So, if time permits, take a look at this review of Foer’s book on memory here.  It appeared in Salon back in March.  It’s a good read and well worth the time you’ll spend with it.