The Birmingham age-herald., 1916-07-12
TALKS ON THRIFT
YOUR BUSINESS CAPITAL

| Thirty per cent of those who fail in business do so because they lack capital. No business can succeed unless it has backbone, and this backbone is the in vested capital of the proprietor. Whether it Is a million dollar corporation or a cor
 ner grocery, there must be, as founda- ton, the investment of the proprietor. The man who starts out in business lon a shoestrong fails. No matter what he may have in the way of borrowing fla elites, there may come 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, requires money, and this money should be the saved money of the proprietor.
 Just how much capital a concern re- quires is matter of individual require ments. The larger the business the larger
 the capital. If for instance, a man were to engage in a mercantile line, he should have enough money saved by thrift to buy his fixtures, and part of his stock, and a 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 particu lar that borrowers keep a balance is not that the bank wants excessive profits lending, 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 command all the time.
 The position that if I borrow a thou sand and am asked to keep $250 on de- posit, I might as well borrow $750 is not we'll taken; for even though the bank balance Is borrowed money, and costs the interest, it is a cheap price to pay for the bankers good will. In fact, a business man could well afford to pay per cent for money and leave 1t 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 lla- bilities 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 receivable, accounts re- ceivab,e and merchandise. Quick liabilities are: Debts due for borrowed money and debts due for stock. The difference is the working capital-the amount in excess ot the debts This means to say that if the quick assets were all turned into cash and the debts paid, without disturbing the other assets, such as real estate, machin- cry, etc., there would be cash balance left over.
 One of the great weaknesses of Ameri- can business life is the starting of a busi- ness on too little capital. Two carpenters and builders who have saved few hun dred dollars decide to be their own bosses and by some scheming get piece of land They persuade somebody or some institu- tion to agree to loan them certain amount on the property when complete and lay their plans carefully and figure closely Something goes wrong. the weather is bad the work is delayed, strikes, and liens not reckoned with, in- terfere, and the result-failure. They lack capital; and lacking it. lose out. They cannot carry their load.
 Clerks with a little money and colossal nerve begin business for themselves, only to find bankruptcy stare them in the face in a short time, due to lack of capital A good year makes the proprietor jublant and willing to gamble that the next will be better. He moves into larger quarters. lives more expensively buys car and hires his servants, only to find depression setting in unsettled business conditions, competition, mishaps, and no way of re- trenching. Happy the man who can plod along on the safe track. satisfied to be sure rather than sorry. Money is power and impotent is the man or the business that lacks 1t.
 Be as honest 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