Music Trade Review
Issue: 1911 Vol. 53 N. 24 - Page 5
Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
THE
MUSIC TRADE
REVIEW
The Granting of Business Credits.
A Vital Part of Every Trade Enterprise—No General Plan in the Piano Trade—Individual Cases Are
Treated in Accordance With the Conditions Surrounding Them—How a Character Asset
Counts As a Basis for Credit—More Care Exercised Than Formerly in the Granting of Cred-
its—Some Expressions of a Business Man Well Worth Reading—Failures in Business Caused
By Unfair Buying—Success Is Due to a Careful Granting of Credit By the Merchant—The
Necessity of Giving Out Statements to Commercial Agencies—The Business of the Country
Is Largely Conducted Upon Credit, Therefore All Information Which Bears Upon the Credit
Situation Should Be Readily Supplied—Successful Merchants Believe in This Policy.
F
REQUENTLY we hear the statement made that certain men
receive credit to a greater extent than that to which they are
entitled by the laws governing trade and commerce. »
Statements have been made that piano credits are too generous
and that such strong credit inducements have been held out to some
piano merchants that all fixed standards have been demolished.
Credit in a business which is as largely conducted upon the
deferred payment plan as the piano business is at all times difficult
and certain individual treatment must be accorded specific cases.
A dealer may have splendid business ability and good character
assets and still be short on money.
Yet he is looked upon as a good risk and many dealers who
possess these characteristics have become rich and successful busi-
ness men by the treatment which they have received at the hands
of some piano manufacturers.
On the other hand, it is certain that some men have received
credit when they possess no character assets and little of any other
nature.
And what is true in other trades is true in this, that one char-
acterless man injures an industry so that his attitude reflects to an
extent upon others.
But it must be admitted that business risks are fewer in this
trade than ever before.
This is evidenced by the decreased number of failures.
The retailer and his credit will always be a subject of intense
interest and different trades may have different rules to apply.
While discussing conditions in a trade which is closely related
by affiliation with the music trade, a credit man expounded some
interesting views.
He gave an interesting personal experience regarding credit
and stated that he believed that business success could only be
achieved by giving special consideration to the credit end of the
industry.
. Illustrating his argument he said:
"Several years ago a young man of my acquaintance entered a
western city and embarked in the retail business with a total cash
capital of $1,500, that by frugality he had saved from his small salary.
He rented a store at $1,250 per year for five years and then proceeded
to purchase as many goods as he could pay for. He cultivated the
acquaintance of the cashier of the bank where he did his business,
and a few weeks after opening his store borrowed a sum of money
from the bank and increased his stock. He had rented a large store-
room and his limited capital did not allow him to cairy as large a
stock as he desired, but he persisted in discounting all bills and buy-
ing closely. At the end of the first year it was necessary to put on
his store shelves and counters empty boxes as his stock was much
depleted, but he was able to pay off his loan at the bank and had a
surplus besides.
"The next year he borrowed a larger sum, but continued to dis-
count his bills. Everyone was anxious to sell him for his credit
was without a blemish, and in a few yea.rs he had increased his stock
in the original store to over $15,000 and opened several branch
stores. To-day he is connected with geyeraj strong: financial insti*
tutions in the city in which he resides,
"You may say, 'That sounds good, but how am I going to do
it/ I say, 'Make your business fit your capital.' The secret of his
success was that he made his business fit his capital. And this leads
me to one or two axioms I desire to propound. First, no man
should go into business unless he has a reasonable amount of money
and above all be sure that he knows something about the business
that he is entering into. Then he should buy only as many goods
as he is reasonably sure that he can pay for and discount all his bills.
"Starting out with a certain capital he should estimate the amount
of business that he feels that he should be able to do monthly. De-
ducing from this his store and personal expenses he should then
buy only as many goods as he can reasonably expect to pay for
promptly when due.
"He should keep a careful record of all goods purchased—
when they are to be shipped and when he can save his discounts;
then limit his purchases absolutely to the amount that he has esti-
mated will be available for paying bills from month to month, and
he is sure to win. If his sales are better than he anticipated he can
buy more goods. He can send in mail orders for the most profit-
able sellers. On the other hand, if his sales are less than anticipated,
purchases should be curtailed, but every effort should be made to
stimulate his sales so that they will equal the amount estimated.
"More failures in the retail business are caused by over-buying
than from any other one cause and many a man who would other-
wise be a successful retailer has been handicapped all through his
life because, through lack of knowledge or judgment, he purchased
more goods than he could pay for during the early part of his busi-
ness career thereby injuring his credit to an irreparable degree.
There are also many retailers who are to-day extraordinarily suc-
cessful and this is due to the fact that they have jealously guarded
their credit, while other men of equal merchandising ability have
been complete failures because they have not realized the necessity
of conserving their credit and have lost the confidence of those
from whom they could secure the most desirable merchandise and
have finally dropped out of the race.
"One more point that is very important and that is the giving
of statements to commercial agencies or to the individual inquiries.
Many merchants seem to feel that they should not be expected to
do this. But, let me ask, how is the jobber or manufacturer going
to be able to do justice in extending credit if one refuses to inform
him honestly and frankly concerning his financial condition?
"Many a man who is entitled to unlimited credit is handicapped
immeasurably by his refusal to make a statement to the commercial
agencies and remains a small dealer all his life, when with the
proper credit rating he would be entitled to purchase direct from
the largest manufacturers. It must be remembered that the con-
cern selling to thousands of customers cannot possibly know each
one personally, but must rely on cold blooded facts as gleaned from
numerous inquiries in order intelligently to extend credit ratings.
The entire business of this country is conducted largely upon credit
or confidence and individual co-operation with organizations that
make the gathering of credit information their business shpuW be
looked upon with favor by every retailer.
THE
MUSIC TRADE
REVIEW
The Granting of Business Credits.
A Vital Part of Every Trade Enterprise—No General Plan in the Piano Trade—Individual Cases Are
Treated in Accordance With the Conditions Surrounding Them—How a Character Asset
Counts As a Basis for Credit—More Care Exercised Than Formerly in the Granting of Cred-
its—Some Expressions of a Business Man Well Worth Reading—Failures in Business Caused
By Unfair Buying—Success Is Due to a Careful Granting of Credit By the Merchant—The
Necessity of Giving Out Statements to Commercial Agencies—The Business of the Country
Is Largely Conducted Upon Credit, Therefore All Information Which Bears Upon the Credit
Situation Should Be Readily Supplied—Successful Merchants Believe in This Policy.
F
REQUENTLY we hear the statement made that certain men
receive credit to a greater extent than that to which they are
entitled by the laws governing trade and commerce. »
Statements have been made that piano credits are too generous
and that such strong credit inducements have been held out to some
piano merchants that all fixed standards have been demolished.
Credit in a business which is as largely conducted upon the
deferred payment plan as the piano business is at all times difficult
and certain individual treatment must be accorded specific cases.
A dealer may have splendid business ability and good character
assets and still be short on money.
Yet he is looked upon as a good risk and many dealers who
possess these characteristics have become rich and successful busi-
ness men by the treatment which they have received at the hands
of some piano manufacturers.
On the other hand, it is certain that some men have received
credit when they possess no character assets and little of any other
nature.
And what is true in other trades is true in this, that one char-
acterless man injures an industry so that his attitude reflects to an
extent upon others.
But it must be admitted that business risks are fewer in this
trade than ever before.
This is evidenced by the decreased number of failures.
The retailer and his credit will always be a subject of intense
interest and different trades may have different rules to apply.
While discussing conditions in a trade which is closely related
by affiliation with the music trade, a credit man expounded some
interesting views.
He gave an interesting personal experience regarding credit
and stated that he believed that business success could only be
achieved by giving special consideration to the credit end of the
industry.
. Illustrating his argument he said:
"Several years ago a young man of my acquaintance entered a
western city and embarked in the retail business with a total cash
capital of $1,500, that by frugality he had saved from his small salary.
He rented a store at $1,250 per year for five years and then proceeded
to purchase as many goods as he could pay for. He cultivated the
acquaintance of the cashier of the bank where he did his business,
and a few weeks after opening his store borrowed a sum of money
from the bank and increased his stock. He had rented a large store-
room and his limited capital did not allow him to cairy as large a
stock as he desired, but he persisted in discounting all bills and buy-
ing closely. At the end of the first year it was necessary to put on
his store shelves and counters empty boxes as his stock was much
depleted, but he was able to pay off his loan at the bank and had a
surplus besides.
"The next year he borrowed a larger sum, but continued to dis-
count his bills. Everyone was anxious to sell him for his credit
was without a blemish, and in a few yea.rs he had increased his stock
in the original store to over $15,000 and opened several branch
stores. To-day he is connected with geyeraj strong: financial insti*
tutions in the city in which he resides,
"You may say, 'That sounds good, but how am I going to do
it/ I say, 'Make your business fit your capital.' The secret of his
success was that he made his business fit his capital. And this leads
me to one or two axioms I desire to propound. First, no man
should go into business unless he has a reasonable amount of money
and above all be sure that he knows something about the business
that he is entering into. Then he should buy only as many goods
as he is reasonably sure that he can pay for and discount all his bills.
"Starting out with a certain capital he should estimate the amount
of business that he feels that he should be able to do monthly. De-
ducing from this his store and personal expenses he should then
buy only as many goods as he can reasonably expect to pay for
promptly when due.
"He should keep a careful record of all goods purchased—
when they are to be shipped and when he can save his discounts;
then limit his purchases absolutely to the amount that he has esti-
mated will be available for paying bills from month to month, and
he is sure to win. If his sales are better than he anticipated he can
buy more goods. He can send in mail orders for the most profit-
able sellers. On the other hand, if his sales are less than anticipated,
purchases should be curtailed, but every effort should be made to
stimulate his sales so that they will equal the amount estimated.
"More failures in the retail business are caused by over-buying
than from any other one cause and many a man who would other-
wise be a successful retailer has been handicapped all through his
life because, through lack of knowledge or judgment, he purchased
more goods than he could pay for during the early part of his busi-
ness career thereby injuring his credit to an irreparable degree.
There are also many retailers who are to-day extraordinarily suc-
cessful and this is due to the fact that they have jealously guarded
their credit, while other men of equal merchandising ability have
been complete failures because they have not realized the necessity
of conserving their credit and have lost the confidence of those
from whom they could secure the most desirable merchandise and
have finally dropped out of the race.
"One more point that is very important and that is the giving
of statements to commercial agencies or to the individual inquiries.
Many merchants seem to feel that they should not be expected to
do this. But, let me ask, how is the jobber or manufacturer going
to be able to do justice in extending credit if one refuses to inform
him honestly and frankly concerning his financial condition?
"Many a man who is entitled to unlimited credit is handicapped
immeasurably by his refusal to make a statement to the commercial
agencies and remains a small dealer all his life, when with the
proper credit rating he would be entitled to purchase direct from
the largest manufacturers. It must be remembered that the con-
cern selling to thousands of customers cannot possibly know each
one personally, but must rely on cold blooded facts as gleaned from
numerous inquiries in order intelligently to extend credit ratings.
The entire business of this country is conducted largely upon credit
or confidence and individual co-operation with organizations that
make the gathering of credit information their business shpuW be
looked upon with favor by every retailer.
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