Business Beat

“Ownership fi financing

The retailer has two general ways of
financing his business: with Ownership
Dollars and with Borrowed Dollars. Of

_ the two, the former is much the better, at
‘feast in the beginning,

Ownership Dollars are the dollars that
the retailer invests in the business as the
sole owner. Or they may be the dollars
the owner and partners invest if the.
business is a partnership. Or they may be.
the dollars shareholders invest if the .

= Manager, Terrace business is a limited company.

Federal Business Sole Ownership: The commonest form

Development Bank of retail financing is with the fupds pro-
vided by the owner. These

by Phil Hartl

%

are usually a mix of personal savings supplemented with funds
raised by borrowing on personal assets.

- ‘The more money the retailer can put into his business, the less
has to be borrowed. At the same time, the larger the owner’s per-
sonal financial commitment to the business, the more attractive it
will appear to an outside lender, should the need arise to apply
for a loan. ;

As the sole owner of the business, the retailer owns alll its
assets, is responsible for all its liabilities, and receives all the in-

“come the business generates.

Partnership: Supposing, however, the retailer hasn’t enough
funds to start up or maintain his business. A partnership with
‘others may then be an option.

They might be silent partners, putting up a specified share of .
the retailer’s cost in return for a proportionate share of the pro-
fits. Or they might be active partners, sharing in the management
and operation of the business as well as its profits.

Limited Company: The retailer taking this route incorporates
the business, purchases as many of the shares as possible, and

_ Sells the balance of the shares as possible, and sells the balance of
‘the shares to the public. As a public company, it can own assets,

- make contracts and undertake’business transactions but only in-

sofar as these activities are approved by the majority of the

shareholders. The retailer’s own participation in the company is

determined by the shares held or by contractual arrangements

. made, with the other shareholders.

-- The advantage of employing Ownership Dollars,’ as distinct °

from Borrowed Dollars, is that the business is relieved of the

- burden of debt service. And, the commitment of one’s own

money, whether as the sole owner, as a partner or as a

_shareholdey, brings with: it a continuing interest in the success of

the business.
' Many-retailers have pursued sole ownership to- their ultimate
disadvantage. Rather than be prepared to share their profits with.
‘partners or, in those infrequent instances where-a limited com-
pany is indicated, with shareholders, they*ve- attempted to do it
themselves with insufficient financial resources.
It’s obviously far better to have a share in a successful. business

than to own outright ‘one that is not. successful.

_ Once the business is established as a going concern, of course, |
it should be able to meet much of its future financial re-
quirements from the current profits it generates. The important
consideration, however, i is to have 'it adequately funded from the
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| Terrace Review — Wednesday,’ September. 14, 1988 13

mi You can t get there |

(directly) from here |

Getting from Terrace to
northern B.C.’s largest city,
Prince George, can mean a long
day of driving, 11 hours of train

travel (available only three days —

a week), or cooling your heels in
the Vancouver airport while
waiting for a connecting flight
back up north. Why aren’t there

. flights available On an east-west

basis, from Prince George right
‘to the northwest coast?
The Terrace and
Chamber of Commerce asked its
members lately to call or write if
they are interested in such a
flight, Bobbie Phillips explain-
ed, ‘“‘Having to spend three days
away for a one-day business
meeting is just too much, I’ve
had some calls already, and if
there’s enough response a com-
mittee will put together the in-
formation and approach the
airlines.”’. Phillips added she
understood cost would be a fac-
tor, as airfares would have to
.compete with the low gas costs
that drivers of smaller cars can

‘District ©

get away with, **] can-drive to
Smithers and back for $13, a trip
to Prince George might cost as
little as $25."

A number of companies have
tried providing the east-west ser-
vice in the past, but with little
success. Phillips suggested the
use Of non-pressurizéd planes,
with their lower-altitude flying,
and possibly poor scheduling
and publicity were the problems,
Diana Elkins, dispatcher at
Trans Provincial Airlines, recall-
ed her company’s attempt at fly-
ing passengers to Prince George.
Using a DC-3 and then a 48-seat
F-27, the company offered a
five-days-a-week service. ‘‘We

‘were about the fourth company -

to try it in 10 years, and every
one had to give it up because of
financial losses. There just
aren’t enough passengers to
make it work.’’ Other com-
panies who tried the route were
Northern Thunderbird, Colum-
bia Airlines, Kenn Borek Air
and Pacific Western.

Elkins said trying to revive the
service now might be even more
difficult, as many frequent
flyers have use of corporate jets,
such as B.C. Tel, the RCMP,
and other large organizations.
The individual business traveller

‘tends to drop in on the towns
along the way, making. travel by

car more suitable.

Terry Morris, chairman of the
Airport Advisory Committee,
has worked in aviation since
1969, and has observed the
various attempts at east-west air
service. A combination of fac-
tors, including the relatively
small population, lack of
numerous viable airports to use
as alternates, and adverse
weather make the route dif-
ficult. The main problem,
however, is equipment. ‘We
still lack a high-speed, comfor-
table 20 or 25 seat plane
available at reasonable cost.’

He said air passengers have
become spoiled by the sophis-

continued on page 23

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