As no-one seems to have noticed...

I have looked at the rents now charged as to what they were. They have not changed. The min rental period has been increased from 2 weeks to 4 weeks but the rents are the same. In Palomma's case maybe, as she had a special deal. As far as "poor management or deceitful? First I dont know why my business is your business and I completly refunded any outstanding rents 100% no exceptions. So with this said if you dont wish to rerent DONT, this is your choice as selling the malls was mine and mine alone.

I stand my ground on the fact that not mentioning a word to your group members that Plush was going under entirely new ownership, was at least disrespectful. I personally feel decieved and it has left a bitter taste in my mouth, regarding both parties.

And for the record, my small spot went from L$25 per week to L$50 per week. And as I posted before, yes I have more prims.. but that is of little consequence to me in this particular location. No, I didn't check to see who owned the rent tracker & no I didn't read the fine print the thing spewed out until after I paid it. So that's my bad, and I'll eat it.

Bottomline for me.. I was doing business with you, Blue and when I fed that new rent tracker that I'd recieved several messages about - from you - I had no reason to think I was handing my money to someone else, as you never mentioned a thing about it. I think letting us know would've just been common & good business ethic. I beg to differ on this business change of yours, not being any of my business.. in this case.

Monopolicies = high prices

Just look at cable companies in the USA!

While you did refund the rents, you made no mention of the sale or reason for doing so - just followed up with a message that new rental boxes were out and to go rerent. Even then, you did not say a word about this. I went to E-City to rerent my store after receiving your message, and there no rental box in the store. I sent an IM to you but received no response, and then found out that the sim had been sold to Anshe in the forums several days later.

While certainly it is your business, the fact that you said nothing about any of this to your tenants (it took Roberta posting in the forums for this to be public) doesn't speak very highly of you. I was a happy tenant, although E-City did not perform anyway near my other stores, and have always liked you - but I must admit the way this was handled, complete with a post in the forums gloating about your BMW, was rather disappointing. Enjoy the car - the CL600 is definitely a much superior ride.

I would like to point out that there are other options to telehub malls. They are those malls that can offer more traffic, more prims and for fewer L$ per week and most without multiple week rental minimums. One of those malls is located at Night Mountain (I know, shameless plug), of which Palomma is a treasured retailer. Sure, these malls may be a little further traveling distance, but some of them offer low lag alternatives to the telehub malls with a bit more personal attention.

Will everyone make stellar profits at a non-telehub mall? I surely can't gaurantee it, but I know most of us work our butts off to bring in the customers. Whether or not those potential customers purchase a product, is of course, up to them.

As far as communication, each mall owner (telehub & non-telehub) strives to have good communications with our retailers. I myself prefer using notecards, as they are less likely to be lost in the confusion, as I did announcing the upcoming rebuild of Night Mountain. I thanked all of my retailers for making the rebuild possible and even necessary because the success of Night Mountain. I have great retailers and I try to treat each of them with the respect that they deserve.

As for the debate about figuring in the cost of land in your expenses, as an accountant, it is prudent to factor in your cost of land, as it is a capital outlay. Until the cost of your capital outlays are recouped, you cannot claim profit.

Anyway, as stated above, there are alternatives to the telehub malls. You just have to decide if those alternatives are right for you.

This astonishes me. Capital purchases do NOT come out of profit. What do people imagine depreciation is ? It is a mechanism for allocating to each profit calculation only a fair proportion of any big purchase (asset) which is of benefit to many profit periods. The probable resale value of the asset, and its change over time is used to decide how much to allocate. Even for appreciating property, it is unusual to use a negative depreciation value (ie add the appreciation into the profit). This is because accountants love caution. Nevertheless, such appreciation is often added in to profit, by occasionally revaluing the assets.

The most logical way to handle the value of land, even in second life, is to charge against profit the interest which is lost by laying out the purchase price, and then to factor in a pessimistic assessment of likely changes in the capital value. Only if you believe the resale price will sink to zero during the period should you subtract the lot from profit. Since that is only likely if SL folds, thus eliminating all your other SL assets too, it is hardly a logical position in running an SL business.

To adopt such a viewpoint, you would in effect be calculating purely on how much RL cash you can get out to safety each month, regarding nothing else as having value at all. In other words, what you are doing in SL has little in common with a real business. Drastically reduces the learning value of the activity. If "profit" just means "cash moved to safety" the word is being misused.

For an accountant to say, of anything regarded as a business operation, "Until the cost of your capital outlays are recouped, you cannot claim profit" leaves me absolutely gobsmacked. I know of no country where the accounting profession would agree. Or the tax authorities.

One of the values of secondlife is for people who have never run their own business to learn the basics. This sort of misinformation, directly opposed to any real world practice, is not helpful.

Again, I will state, until the cost of your capital outlays, whether through depreciation (which just means the the US taxpayer is subsidizing your income and which land has never been in the US tax code as being allowed to be depreciated) or through income, you cannot claim profit. We, however, are not talking about RL, we are talking about SL where depreciation is not a factor, as no one pays actual taxes that one receives refunds on. When was the last time anyone in SL paid capital gains taxes on the profit they made after the sale of their land? In fact, all business owners have major capital outlays that can only be recouped through income.

Back to my original point, there are alternatives to the telehub malls, if you want to take the chance on them. You might just find out the risk/rewards are well worth it.

I'm sorry, Timmy, depreciation does not exist because of tax. It is a way of preventing profit figures being made meaningless. Important for planning and evaluating your business performance. For deciding whether a project is worth doing.

Imagine you run a business which buys a building which will last for 30 years. If you include the huge one-off purchase cost in that years profit, then you will calculate a huge loss that one year. Making a nonsense of any attempt to evaluate year-to-year performance.

Yes, the tax man refuses to let you tell him you made such a nonsensical loss. If he allowed it, you could postpone paying tax that year, and probably for several thereafter. And yes, he has rules about what amount the profit CAN be reduced by (ie the depreciation), and his figures must be incorporated into the accounts submitted to him. But for your own management accounts, which you use to plan and control your business, you adopt your own depreciation policy to give you the best possible understanding of how you are doing.

Anyone seriously evaluating an SL business plan should do the same, particularly if they ever hope to run a serious business in RL.

Perhaps I need to make it even simpler:

You can usually and probably get most of your land purchase price back any time you care to terminate or move the business.

An accountant knows how to handle this so that existing businesses can be monitored, and so that possible future business alternatives can be fairly compared. He uses a concept called "depreciation", which has a confusing name, so most people misunderstand what it is and how it works.

Yes, there are many complicated ways in which an accountant, such as myself, can make the value of capital items, including land, appear worthless on paper, but they all rely on the tax code. Remember, it is because of the antiquated, bloated and behemoth tax code that many business owners rely on accountants and lawyers to "fake" their profits by making their capital items appear worthless.

But you are trying to compare apples to oranges here. As stated before, SecondLife does not rely on a tax code, therefore one cannot depreciate or otherwise fake the loss of value of their land to gleen a profit. Only in real life can one do so.

In SecondLife, it is always prudent to figure in your intial capital outlay for your land in order to get a true picture of your profit or loss. It is very true that you may not realize a profit at all until you have sold your land. I have not disputed this, I have just presented the facts, though there those who would like to disagree with them. That's fine, but at least stay in within the facts and don't try comparing apples to oranges, no matter how much you would like them to be the same.

Thats a pretty bold assumption in this volatile land market.

I have to agree w/ Timmy on this one, the cost of the land must be recouped prior to claiming a profit. If/when the land is sold, that figure should be added to the overall profitability of that location.

1. Yes - I stated that tax is irrelevant to the issue of how to treat capital spends, in SL and in RL. Why keep responding as though I said the opposite? It is irrelevant to this issue. The tax man wants you to do it, but all rational businesses do it anyway. I thought I had explained why.

2. Depreciation is a rational procedure to allow different business strategies to be fairly compared, and the performance of an existing one to be evaluated.

3. It has nothing to do with "faking" or "gleening".

4. Frankly, this stuff is day one at business school.

I just checked the stats, Schwanson. Land sales in world go back to August 2004, and in all that time,the in-world median price range is between L$6.10/m and L$4.00/m. Buying at the top figure and selling at the bottom represents a drop in value of 34%. You'd have been very unlucky to be forced into acting at those two worst moments, but I'd say that assuming a recovery of this figure(ie 66%) in business planning would be sufficiently prudent. Assuming 0% is not necessary or sensible unless you envisage SL closing down, in which case every other aspect of all your SL projects are gone too.

I would think "You can usually and probably get most of your land purchase price back" is about right.

You can of course plan any way you choose. Consider, though, if you are trying to decide between two projects, one with a big land investment, and one without. To decide which will bring you in more money by the end, you would have to consider resale value, otherwise the evaluation would be totally biassed against the land-intensive one.

And if you had two such projects running in parallel, and were monitoring them both to see which was doing better, you would have to decide each month how to correct the two profit figures to make them comparable. Otherwise you might easily kill the most valuable one of the two by mistake. Enabling such fair rational comparisons is the entire purpose of depreciation.

Without such comparisons you have nothing but "seat of the pants" intuitive judgements to base choices upon. Ok, I suppose, if you just treat it as a game. But I think it has lots more to teach.

Perhaps we should start an SL business school. Its not that difficult.

Ok, one more time and this time I will go real slow:

The only way that depreciation can be calculated is if there is a tax structure in place. Since the concept of "depreciation" is 100% reliant on a tax structure, since it was a tax structure that created the concept in the first place.

You can try and lecture me all you want, but the reality is, depreciation is a misnomer in a system where it cannot be appropriately measured.

To me, SL is just a game. I am not in here to make RL profit. I am in here to enjoy myself, have a little bit of fun and maybe even relax. However, when I have to teach basic tax accounting and law to someone who feels that they can transport every concept from RL into SL, it becomes all that less relaxing.

The simple formula for figuring your profit is simple in SL, if you are a land owner: Profit = Revenues (including sale of land) - Purchase Price of Land - Other Capital Outlays - Advertising/Promotion.

See how simple that formula is? Too bad not everyone gets it. Yeah, you are right, SL Business 101 should be taught, only you need to be the first student, then maybe I wouldn't have to waste my time telling you the difference between apples and oranges.

(NOTE: I realize the above post will most likely get me into trouble. So be it. I have pointed out the facts so many times, it is tiring. Hopefully someone will have figured it out by now, other than those who have voiced "getting it".)

You are right Timmy, you are another mall I sell well, and I don't have to spend all my money into it

Thanks for having your malls around!!

Thanks Palomma. And that was my main point. There are alternatives to the telehub malls. Alternatives that offer low lag, low cost, high traffic alternatives.

Sorry Timmy, you are absolutely incorrect.

The connection between depreciation and tax is entirely incidental.
Depreciation is a method of fairly allocating capital purchasesw across the time periods in which they provide value to the business. I would still need it if tax did not exist.

I have run my own successful RL business for many years, and dealt with numerous accounting firms, and without this concept I could never rationally compare alternative future products, or current operational ones. I have examined, compared and discussed the accounts of numerous businesses, including their management accounts in which the taxmans enforced choices are factored out. I have never encountered anything other than an amateur operation (or one with no significant capital purchases at all)which did not use a depreciation figure.

Please don't use an insulting and personal tone. I am simply taking issue with facts and viewpoints.

Your sentence "... only you need to be the first student, then maybe I wouldn't have to waste my time telling you the difference between apples and oranges." is a personal insult and unacceptable in the forum in my opinion. I would appreciate an apology. I would never dream of implying anything about you personally. Lets all work hard to keep the forums on topic and polite. Now that the mega-troll is gone I think we all need to seize this opportunity to improve our forum behaviour.

The nearest I came to anything personal is "4. Frankly, this stuff is day one at business school." but this makes no such direct reference to you personally.

Timmy,

I find your patronizing tone distasteful. I don't believe Ellie was attacking you, but merely expressing a differing view.

As an SL business man, I have also tended to write off the full value of the land as a cost in my decisions. However, I am intrigued by the use of depreciation to make better decisions. I am not accountant and can barely keep a checkbook balanced, so I was wondering, Ellie, if you could lay out a hypothetical scenario on how to use depreciation in an SL business decision?

Thanks

Well, after reading everyones post I gotta say first thanks, I have received so many IMs from people sorry to see me sell. In all honesty I ran the malls as a service. If you have done the math you'll realize that I worked on a 15% margin. With few vacant shops this in itself is still not a great deal. With almost 600 shops the simple task of cleaning and responding to tenants became alittle overwhelming. Although many of you were the greatest people to work with there were also the less than tactful and often rude group that made it less of a service and more of a job. I would receive on average 70 to 100 offline emails and online IMs daily. I found myself doing nothing more that responding to IMs.

In responce to the points made about not informing the group. I did not do this for two reasons. First I did not want to start a panic where everyone left in fear of what was to come. Second I had so much going on IRL there was no way I could have responded to the hundreds of IMs that would have followed. In looking back at this it may have been better to post a group infomation post or notecard. My mistake and for this I apologize.

As far as the car, although SL has been very good to me clearly my recent purchase is not a result of my gaming. It was a joke I was trying to make a funny and shit I was alittle excited about my new ride. Christiano and his CL600 OMG if I had your money I'd burn mine. Geez man those cost more than a condo. Also I apologize, I did not get your IM, Im not sure why. I understand I have not received all of my mail.

To the Plush Group as a whole, THANKS honestly, for the most part a great group of people to work and play with. I wish the best for you all. I hope that my exit will not bring a hardship this was NOT my intent.

With this said thank you all for understanding my reasons.

Sincerely,

Blue

Hi Nickiam
i would like to do as you ask, but it would take a while and I have a tough few days ahead. Kids returning from university, moving flat, etc etc.
Here is a link which could be useful
http://www.rtoonline.com/Content/Contributor/John_Day/UnderstandingDepreciation.asp

It doesnt emphasize the main purpose and usefulness of the method, which is in business decision making when you have to choose between, say, a capital-intensive and a low-capital project which are vying for your money. It does show how the IRS demand that their standard methods must be used for a special version of your accounts, which is used to compute an "IRS approved" profit figure for tax calculation purposes. Far from the depreciation being used to "fake" low profits, its purpose is exactly the opposite. The IRS insist on a standard calculation precisely to stop people subtracting any capital spend out of their profits in full. In other words the depreciation is insisted upon in the tax calc precisely to prevent "low profit faking".

But this is all just how the IRS decides what tax is fair. It has nothing to do with why a sensible depreciation system is vital to the business manager for his own purposes.

It's best not to think of this in the way its name suggests, as a sort of fund put by from profit to allow the future replacement of deteriorating machinery, etc. Though that is one way of looking at it. Its best to think of it as part of a sort of "rent" that you charge your own project for using the asset . If you set this at the right level for each possible project and asset, then it corrects for their different asset requirements, and allows you to make fair comparisons between them. Without it, you can't.

I'll try to knock up an SL relevant spreadsheet, but don't hold your breath about when.

On Saturday I decided to take the plunge and rent space in a mall for the very first time. I rented a number of spaces in the Plush Shops in Baileya. I didn't realize when I did this that I wasn't supposed to rent a spot that still had things in it, even though there was a vendor there in the front of the store to rent it out. (I know ... dumb noob ;^( Anyway, I've sent IMs to several people in the group, and to Anshe, and I still haven't heard back. I put items into the shops that were empty, but am paying for space in several others that still aren't vacant, and still no word.

Not sure what to do?

Is this mall still operating? Is someone still in charge? I understand, Blue, that you've sold this to Anshe, but I can't seem to get anyone to answer my IMs. Any suggestions?

Looking forward to joining the ranks of retailers if I can get myself back on track.

Thanks a bunch,

Sue.

Sue,

Not to knock on anyone, but not all mall owners and manager are created equal. I am going to put in a shameless plug here and suggest that you check out both Night Mountain (Moen 100,110) and South Paris. You will find fast, friendly and helpful service provided by Timmy Management Inc (TMI).

As a newbie, what you did is normal. Hell, I have seen those players with lots of experience do the same thing. I respond as quickly as possible and if I am unable to clear the spot rented (due to the former renter being a long time tenant), I will happily refund the rent paid, show you other spots and even give you free rent for the inconvenience.

This is one reason that Night Mountain is prized for being a low cost, low lag alternative to many malls in SL.

Wow ... there's a little piece of serendipity ;^) I had actually just rented some vending machine space in at Night Mountain right after I posted this, and just returned from there to add another comment to my note. Was nice and easy. Thanks!

In order to place your items in most malls, you have to be a member of their group. I've been able to sign up for the groups in the other two malls (your's included, Timmy), but I can't do this with the "Plush Shops" group. Seems like it's by invitation only. This is why I sent my first notes out on Saturday, and since I've still not received an answer, or an invitation, the shops have been returning my stuff to my lost and found folder, even though I've paid several thousand Linden $ to rent the space. This is a real pain in the butt since it takes time to set everything up, and having it all returned when you've been waiting for an answer for three days is kind of frustrating. Paying rent (not cheap) but can't reap the benefits yet :^(

Not to complain. Renting before things were cleared was entirely my fault, and I'm sure all will be well once the group issue gets straightened away.

Thank you, finn :^) In the group now. That will help with one of the problems right away. Appreciate your quick response very much!