The daily telegram. [volume] (Clarksburg, W. Va.) 1901-1926, 1916-07-13
be. as a foundation. the Investment Of

be. as a foundation, the investment OF
the proprietor.
The man who starts out in business
"on shoestrlng" fails. No matter
what he may have in the way Of bor-
rowing facilities, there may come a
time when he finds the avenues OF
borrowing closed against him. Then
his reserve capital comes into play.
To meet the weekly payroll, stock
up, tide over bad times, fit the place
up with machinery and fixtures, re-
QuIres money, and this money should
be the saved money Of the proprietor.
Just how much capital a concern re-
Quires is a matter Of individual re-
quirements. The larger the business
the larger the capital II, for instance,
man were to engage in mercantile
line, he should have enough money
saved by thrift to buy his fixtures,
and part Of his stock, and balance
for working capital TO keep in the
bank. He should not put all his money
in fixtures SO that he has none for
stock, and vice versa. Neither should
he forget that his best credential with
his banker is a good working balance.
The reason why banks are so par
ticular that borrowers keep a balance
is not that the bank wants excessive
proHts-lendlng, say a thousand and
asking that one-quarter Of it be kept
on deposit, but that the borrower may
have free working capital at his com
mand all the time.
The position that II borrow a thou
sand and am asked to keep $3.50, is
not well taken; for even though the
bank balance is borrowed money, and
costs the interest, 1t is cheap price
to pay for the bankers good will.
In fact business man could well af-
ford to pay six per cent for money
and leave it with his banker, for the
good it would do his credit.
In the granting Of credit, business
men as well as bankers, give due heed
to the ratio between quick assets and
quick liabilities. The banker likes to
see two to one-two dollars of quick
assets to one dollar of quick debts
The quick assets are: Cash, bills re-
ccivable, accounts receivable and mer-
chandise. Quick liabilities are: Debts
due for borrowed money and debts due
for stock. The difference is the work
ing capitalize amount in excess OF
the debts. This means to say that II
the quick assets were all turned into
cash and the debts paid without dis
turbhg the other assets, such as real
estate, machinery, etc, there would be
a cash balance left over
One Of the great weaknesses Of
American business life is the start
ing of a business on too little capital.
Two carpenters and builders who have
saved few hundred dollars decide
to be their own bosses and by some
scheming get a piece of land They
persuade somebody or some institu-
ton to agree to loan them a certain
amount on the property when COM
plete and lay their plans carefully and
figure closely Something goes
wrong, the weather is bad the work is
delayed, strikes, and liens not reck-
oned with, interfere, and the result
failure. They lack capital; and lack
ing It, lose out. They cannot carry |
their load.
Clerks with little money and colos-
sal nerve begin business for them !.
selves, only to hpd bankruptcy stare
them in the face in a short time, due
to lack Of capital. A good year makes |
the proprietor jubilant and willing to
gamble that the next will be better .
He moves into larger quarters, lives
more expensivGly. buys a car and hires
his servants, only to find depression
Settling in, unsettled business condi-
tons. competition, mishaps. and no
way OF retrenching. Happy the man
who can plod along on the safe track
satisfied to he sure rather than sorry
Money is power and impotent is the
man or the business that lacks It.
Be dishonest as you expect the other
fellow to be. Get all the ability you
can acquire and all YOU can afford to
buy. but do not overlook the important
fact that backbone is necessary in
every business just as it is in every
body. and without it in sufficient meas
urc success is impossible and failure
sure to come. He is wise man who
knows his own strength and doesn't |
hitch up to more than he can pull