Presto

Mav 9, 1925.
13
PRESTO
and when the time arrives that he ceases to need
outside financing he can gradually eliminate this
expense by simply selling no more paper.
The Profitable Way.
Having decided to use the facilities of a finance
company the next question that presents itself is,
how can these facilities be used most profitably? The
first thing to do is to stop buying on note settle-
ments. There are few manufacturers who will not
sell at a considerably better price, when orders of any
size are regularly accompanied by a certified check,
than on a 4-8-12 months or longer note settlement
basis and the price difference in many instances will
be greater than the usual 2% to 5% cash discount
mentioned on the invoices.
Having determined, by a careful survey of his
anticipated volume of business, his stock on hand,
local conditions, etc., just what goods need be
ordered, an amount of installment paper should first
be sold the finance company to produce cash suffi-
cient to pay for the goods.
The company with which 1 am associated and
which has specialized in the financing of the music
industry for over 18 years past, offers the music mer-
chant its facilities in a variety of ways in order to
serve the needs of the individual merchant. Chief
among these various forms of financing is their so-
called Merchandise Plan which is offered the piano
dealer in co-operation with over forty of the leading
piano manufacturers of the country.
Under this plan all cost of financing is paid by the
manufacturer to the finance company and the Mer-
chandise Plan price of the piano is so computed as to
insure the dealer's getting, in every instance, the ad-
vantage of at least the manufacturer's regular cash
discount. Some manufacturers, who are using the
plan on a scale sufficiently large to secure substantial
benefits from it, have made still further centribution
to the cost of financing so that'the cost to the dealer
is almost negligible.
An Important Consideration.
Rut the important thing to remember is that a
music merchant should never buy on note settlement
and later sell his installment paper to a finance com-
pany to meet the notes. Why? Because when he
does this he pays a long price for his goods in the
llrst place and then pays a brokerage to obtain
funds to pay his notes. If the paper is sold first and
the cash used to pay for merchandise ordered then
the very least the merchant can save as an offset to
the financing expense will be the 2% to S'% cash
discount and in many instances a still better price
will eliminate the balance of the charge.
An operating element inseparable from the proper
Grand and
Reproducing
Grand Pianos
are the last word
musical perfection.
Lester Piano Co.
1806 Chestnut St.
Philadelphia
use of a financing service is turnover. Often times a
dealer has been persuaded by a manufacturer to place
a large order for goods, such of which is not actually
needed until months later, by the offer of very tempt-
ing settlement terms. Such a merchant has forgot-
ten that the very essence of profits is turnover and
the greatest enemy of turnover is heavy inventory.
The merchant with an established line of credit
with a responsible finance company never has to
succumb to the temptation of over ordering as he
has the ready means to pay for his merchandise as
and when needed.
The benefit the merchant receives from installment
paper in his safe is the collections. But when he
uses a certain amount of this frozen capital to settle
for current purchases he has taken the first step in
capital turnover and has placed upon his wareroom
floor new merchandise that, when sold, creates addi-
tional cash and installment paper.
The Process Described.
Under the Merchandise Plan I have already re-
ferred to, you can take ten thousand dollars worth
of thirty months installment piano paper and turn it
into eight thousand dollars' worth of new pianos and
two thousand dollars' worth of the finance company's
interest earning obligations.
Suppose a merchant takes $10,000 worth of his
installment paper and on the basis of the foregoing
illustration turns his investment five times in a year.
His total volume of sales would be $80,000. Suppose
his net profit on this volume was only 6*4% or $5,000.
This would equal a 50% profit on his initial invest-
ment of $10,000, and 50% is a nice profit. And this
is made possible by the proper use of the finance
company's facilities.
And what, may you ask, is meant by the proper
use of the finance company's facilities? Sell your
installment paper only to settle for new merchandise.
Tt is not sound operating practice to sell paper to
meet overhead and other expenses.
For the music merchant the rapidity of turnover
rests in no small degree upon a properly balanced
inventory. The time is fast passing, in the music
trade, when an enthusiastic factory representative,
by the painting of highly tinted pictures of easy set-
tlement terms and anticipated shortage of goods can
induce the average merchant lo overstock, particu-
larly on slow moving styles.
There has been a great deal of loose thinking,
talking and writing about the excessive profits the
finance companies make. As a matter of fact a
reputable company operating under the requirements
of the banking laws and operating in a safe and prop-
erly conservative manner does not make the profits
on its invested capital that an average successful
manufacturer in any line would be satisfied with.
Competition atone will control the fairness of rates.
With about 600 finance companies in the country,
each striving for its share of business the question of
rates will in the long run take care of itself.
The music merchant can feel assured that a finance
company with long experience in his line of mer-
chandising and filling the above qualifications will
pay him a reasonable price for his installment paper.
To operate at a fair profit whether with or without
a financing service the music merchant must of
course first see that his retail sales are made on not
less than a two for one basis, that his installment
contracts bear interest from date, that allowances
made on trade-ins are not so large that the trade-in
can not be sold at a fair profit after the expense of
reconditioning and a fair amount of overhead expense
are added to the amount of the allowance, and that
his collection department is functioning properly.
Greater net profits will be made when the music mer-
chant follows the example of dealers in other install-
ment lines and adds a financing charge on installment
sales.
In closing I might say that 1 believe that in spite
of the automobile, the vacuum cleaner and other elec-
trical appliances, radio and other lines that are com-
peting for the installment dollar, that an aggressive
music merchant with sound sales and collection poli-
cies and adequate financing arrangements will con-
tinue to make money.
NEW COLUMBIA TRADE-MARK.
A patent for a newly designed trade-mark has been
applied for by the Columbia Phonograph Co., Inc..
Bridgeport, Conn., for use in the sale of its prod-
ucts. The red. white and blue, familiar in Columbia
records, are prominent markings on the new trade-
mark, which will cover phonographs, records, record-
ing devices and accessories.
A QUALITY PRODUCT
FOR OVER
QUARTER OFA CENTURY
POOLE
STEGER ANNOUNCES
NEW SMALL GRAND
Remarkably Attractive Small Grand Present-
ing the Features Most in Dealer's Demand,
Will Be Exhibited at June Convention.
So much interest has been indicated by dealers in
the manufacturing program of Steger & Sons Piano
Manufacturing Company that the news of the crea-
tion of a new Steger Small Grand is certain to
attract widespread attention. It is a beauty in every
respect—another de luxe style in the Steger line-up
with a tone that is rich, resonant and satisfying.
When the travelling representatives of the com-
pany were assembled recently, at the Steger factories,
in Steger, Illinois, they were enthusiastic over the
sales possibilities that this small grand is developing.
Just four feet, ten inches long; offered in satin finish
brown mahogany, it possesses a scale that is funda-
mentally correct from a scientific standpoint and the
design is simple, artistic and refined.
This Small Grand will be featured in the Steger
Exhibit at the Convention next month. It promises
to become a potent factor in extending the prestige
and adding to the good-will enjoyed by the strong
Steger organization. It is in keeping with the pro-
gressive strides that the Steger organization is mak-
ing, to state that Chris Steger, Will Pipenbrink,
Henry Burbach, Ed Duffy, Clark F. Gross, Charles
E. Byrne, Oscar Volkman and Don Steger are direct-
ing every effort to advance the success of Steger
dealers, with well developed plans of dealer co-
operation.
DECKER
U
EST. 1856
& SON
Grand, Upright
and
Welte-Mignon
(Licensee)
Reproducing
(Electric)
Pianos and Players
of Recognized
Artistic Character
Made by a Decker Since 1856
699-703 East 135th Street
New York
ft
Builders or Incomparable
(PIANOS, PLAYER^REPRODUCING PIANOS
THE BALDWIN
CO-OPERATIVE
PLAN
will increase your sales and
solve your financing problems.
Write to the nearest office
for prices.
CINCINNATI
INDIANAPOLIS
LOUISVILLE
INCORPORATED
CHICAGO
DALLAS
ST. LOUIS
DENVER
NEW YORK
SAN FRANCISCO
GRAND AND UPRIGHT PIANOS
AND
PLAYER PIANOS
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