Evening star., 1924-08-24
EXPLAINS GAUG|NG
| oEFUTURE SALES
PabSon Finds Bank Reports
Best Trade Barometer
for Merchants.
BY ROGER w. BABSoN.

BY ROGER w. BABsoN.
pecial Dispatch to The Star.
WELLESLEY HILLS, Mass. Au-
lust 23.-Any community's willing
ess to buy and ability to pay can
g accurately estimated in advance.
Most business men face a sales
roblem. but since goods must be
old in specific localities information
pecific enough to help select the best
held for the sales effort. To over
fome this difficulty certain of my
associates have been working for
Fhree years in an effort to find q re-
liable yardstick by which future
sales possibilities for any territory
br locality may be estimated in ad-
vance. They have found such a
barometer in the trend of the volume
bf local business as reflected in total
bank transactions.
Communities Like People.
Communities prove to be a lot like
individuals when it comes to money
matters. If your income is 20 per cent
greater than it was last year and Is in
creasing you are optimistic and in the
mood to buy many of the things you
have wanted for long time. Your
purchasing power Is greater by one
fifth, but your prosperity complex
makes you twice as good a prospect
for anything you may be able to use.
Again. if we assume that your in
come is 10 per cent less than it was
last year, we find different situa-
tion. You feel poor, you are econ
|omizing, and while your actual pur-
chasing power has been reduced but
one-tenth your resistance to a sales
nd cd
is almost impossible to sell you any
thing that you can get along without
Bank Accounts Tell Story.
1t is much the same with cities.
The totals of debts to individual
represent the community pocketbook.
Increases over the same month mean
that most people are getting larger
incomes. Decreases spell smaller in
comes. When business is on the in
crease the locality takes on an at
mosphere of prosperity. Good
times" become contagious and every
one buys briskly. Likewise a de-
cline has its effect upon the psychol-
ogy of the entire community.
Comparisons Show Trend.
If we get the monthly figures for
any city and compare them with the
same month of the previous year we
get a percentage figure that repre-
sents an increase or decrease. By
testing these percentage figures for
consecutive months we can determine
the trend of our city-a trend that
indicates clearly the psychology of
It's citizens and measures the general
sales resistance to be met there. A
city, for instance, that shows read
ingS of los per cent, 95 per cent and
30 per cent for three months offers
a relatively poor immediate market
while one that shows an upward
trend of S5 per cent, 90 per cent and
81 per cent offers a relatively active
market for immediate sales.
Should you require an estimate on
local business from three to four
months in advance this single barom-
eter of "Tren Of Transactions" can
be supplemented with a study of
sources of income which will give an
inkling of probable trend. We find,
for instance, that s5 per cent of the
total income of North Dakota comes
from crops and live stock. The trend
of prices for these will indicate the
future trend of local business in
North Dakota.
Facts Bearing on Outlook.
If you are selling to small towns or
the first ten ranking States in value
of agricultural and live stock prod
ucts are: l, Texas; 2. Iowa; 3, Illinois;
4, California; S, New York; S, North
Carolina; Z, Pennsylvania 8, Kansas;
9. Ohio; 10, Wisconsin. These offer the
largest markets and benefit most by
increases in agricultural income.
Analysing sources of income we find
that crops and live stock represent
the following proportion of income in
these States: l, North Dakota, 95 per
cent; =, South Dakota, "a per cent;
3. Nebraska, 80 per cent: 4, Iowa, 70
per cent; 5, Mississippi, IS per cent;
s. Arkansas, n per cent: z, South
Carolina, "A per cent; s, Idaho, 73 per
cent; 8. Texas. 20 per cent; 10, Kan
sas, SO per cent; IL, Oklahoma, 81
per cent. These States do not repre-
sent the largest markets for goods
and services sold to the agricultural
community, but they are most directly
affected by changes in the prices of
farm products.
Mail Orders Also Minor.
Mail order sales offer an additional
barometer on the trend of agricul-
tural sales. A jump from "a per cent
to 10S per cent in monthly compari-
sons already reflects the increased
buying due to recent price increases
for wheat, corn and cotton. Whole
sale distribution does not reflect this
increase as yet because the local mer-
chants are selling goods they already
have on hand. Increases of mail or
der sales promise corresponding in
crease in wholesale sales to local
merchants a month or two later.
With general business rather slow
the Babsonchart shows current activ-
ity at IA per cent below normal
competition will be keen this Fall. The
astute business man will measure and
locate his market-then watch the
trend of each locality.
Way to Make Profits.
BY concentrating on the most fer
tile fields he will be able to sell at a
good profit while his competitors
founder with high sales costs and
slow collections.
If you want to estimate future bus
mess and sales possibilities in any
locality compare the Debts to Indiv-