7 Business Beal. > Retail financing and management q uality In the preceding columns, concluding: by Phil Hartt. Manager, Terrace Federal Business" Development Bank with the three-part story of ABC Hard- ware, we discussed the many ways the small retailer‘ — and, for that matter, most other small businesses — can finance their operations. We began that discussion by making the distinction between ownership dollars and borrowed dollars. Ownership dollars are those which the owner of the business (and partners or. associates if any) put in- | to the business. Borrowed dollars are those that are obtained from banks and other’ lenders. We pointed out that the more ownership dollars going into the business the better, particularly at the start. There are several reasons for this, the most obvious being that it reduces the dependence upon borrowed dollars. The use of ownership dollars is paid for out of the business profits in the form of dividends. Dividends are usually declared at the owner’s discretion. Borrowed dollars must be paid for, in the form of interest, at stated rates on stated dates. Too few ownership dollars, too many borrowed dollars, means that a business is committed to carrying fixed costs which are higher than it can afford, Ideally, a retail business should have enough ownership dollars in it to meet its term debt com- mitments, improve its working. capital and, at thé same time, pro- vide enough money for the owner to meet his own personal needs. Borrowed dollars can be obtained through term loans secured © by the assets of the business and for fixed periods at fixed or floating rates of interest. They can be obtained through demand | loans, secured in the same way, but subject to call by the lender. They can be obtained through trade credits, essentially in the form of deferred payments to suppliers. Most small businesses rely upon borrowed dollars to carry | them through slack seasons, to meet inventory purchases and to finance accounts receivable. Dollars borrowed for these uses sup- plement to a large degree the working capital of a business. Businesses will also borrow, as was done by ABC Hardware - whose case was described in the preceding three columns, to , finance the expansion of the business. The amount of borrowing a business can safely undertake, again as was evident for ABC Hardware, is limited by the ability of the business to service its debt and by the security it can offer. It is also limited by the performance of the business. The best credentials that a borrower can show a lender are will- _ingness to commit ownership doliars and acceptable evidence of the ability to repay loans. The willingness of the owner of ABC Hardware.to put $10,000 of his own into store expansion was a_ key factor in obtaining his $30,000) term loan. So also was his undertaking to speed up the turn-over of his inventory. The $30,000 term loan was secured by the $40,000 being put into the physical expansion of ABC Hardware, but the loan itself — was granted only after the banker had satisfied himself that the business was being properly managed and could carry the debt. The quality of management an mance of the business is almost a d its reflection in the perfor- Iways the deciding factor in financing available to that business. Poll results Nine out of ten like northern university An Angus Reid opinion poll commissioned by the Interior _ University Society shows over- whelming support for the con- cept of a university in northern B.C. The poll was conducted ’ during September to determine’ ‘the degree of awareness and sup- port and to demonstrate that level of support to the provincial government. ‘ According to the poll, 92 per- cent of those surveyed indicated moderate to strong support, while-87 percent went as far as to say there is an ‘urgent need’’ for a northern university. Also, 85 percent indicate that their support is strong enough to " make a commitment of $5 fora membership in the society anda “substantial majority’? of nor- _therners are willing, if necessary, to pay additional taxes. ‘Clearly, the findings demonstrate solid public sup- port for the objectives of the In- terior University Society in establishing an autonomous university for northern British Columbia,’”” the report con- cludes.. The survey was con- ducted by telephone of households north of 100 Mile ‘House, using census data to ob- tain a representative indication of opinion. The provincial government is expected to make a decision on the proposal by the end of: the year. . TERRACE — Is your vehicle winterized? if not, it may be wise to get it done today. The cost of antifreeze at many local outlets has already risen by about 65 percent over last year’s price, and before the season is “over it could more than double — if you can even find any. The reason? A fire last spring destroyed one of the two manufacturers of ethylene glycol on the continent, cutting the supply nearly in half. And if there’s any money to be made in selling this petroleum by- product, it’s not in antifreeze — the chemical is used in the manufacture of -nearly all plastics and many of those are .thase who Terrace Review — Wednesday, October 26, 1988.15" highly profitable. There may be some relief for shop around, however. A spokesman for the Terrace Co-op says they are sell- ing four-litre jugs of antifreeze at $9.99 for the balance of this week before it goes back to this year’s regular price of $11.99. This compares to last year’s ‘sale price’ of $7.99. But even at $11.99, it’s still a bargain he says — it should sell for a dollar more, but the Co-op is keeping ‘the price down in order to re- main competitive with some larger chain stores. The price at service stations will probably be higher, but as 1 Antifreeze price frosts consumers one local manager puts it, “Phat’s not a problem.”’ He says there are two factors in their favor. In the first place he says there are five different grades of antifreeze on the market, and many of those “super buys’? are simply watered down versions — it’s up to the consumer to read the label before buying. And secondly, even though there are sufficient supplies in the Northwest for a mild winter such as last year’s, if the north wind blows like it can, antifreeze will be at a premium and the cost will be irrelevant. Antifreeze at almost any price will still cost fess than replacing your engine. When the 2000 British Columbians who will build the Vancouver Island Natural Gas Pipeline begin work early next year, residents on the Island and the Sechelt Peninsula will be about 24 months away from guaranteed energy savings. There’s a significant difference between the cost of electricity or oil, and natural gas - a resource British Columbia measures in the trillions of cubic feet. Just as important as savings in home heating costs will be the impact environment. of natural gas on the economy and the The cost of energy is a major factior in | determining where new businesses will locate. The pipeline makes Vancouver Iskand and the ngng he? | Together. A Better BC. ce For more information on British Columbia’s growing economy, contact your MLA, your nearest Government Agent, or write to the Ministry of Regional Development, Parliament Buildings, Victoria V8V 1X4. Sunshine Coast hot competitors for new industries and new jobs as well as making existing industry more efficient. And in the gas fields of northeastern B.C. there will be stepped-up exploration and development to prepare for an increase of 10 to 15 per cent in the province's gas sales. ' For the environment - gas will cut air pollution. Gas has 50 per cent less potential for acid rain than oil, and 90 per cent less grit and dust.