Duties of a businessman
Pitman Shorthand Exercise 2
By no means the last of the businessman's many duties is that of finding such an outlet for his goods as will enable him to continue at work. Indeed this is sometimes his hardest task. The weekly payments of wages in the factory are dependent upon the profitable sale of the calico or cutlery made in the factory; the regular salaries of clerks and travelers, of warehouse workers, labourers, and transport workers cease if there is a prolonged difficulty in finding customers.
Certainly the factory owner, whose overhead expenses are not much less when the factory is idle than when it is working at full pressure, will work for stock even if sales fall of for a while. But he cannot lay up stock indefinitely. An end must come to that. There comes a time when either work must stop or products be sold.
The wholesale dealer will not dislocate his organization by dispensing with his staff merely because of a brief period of slackness; he will hold on in hopes of better times coming when he will need them. The retailer does not discard his helpers when the spring sales have given place to a dearth of visitors into his shop. Any lengthy failure to dispose of goods is, however, inevitably accompanied by unemployment, unemployment of workers, of capital, and of business ability.
However regrettable it may be, we must regard this as a fact. We may elaborate the argument, but labour it as we may, there is the fact and no ingenuity can get over it. How then are markets to be found? The most effective method increasing sales is a cut in price, or a rise of the quality or attractiveness of the commodity.
This method is at times applicable; and when it is, there is a benefit all round. The consumer gains in the quantity or the quality of the goods; the producer has the advantages resulting from production on a larger scale.
Form the customer in the retail shop; through the warehouseman, to whom the retailer offers bigger orders on condition of more favourable terms; to the manufacturer who looks to the warehouseman for an interpretation of the market, there is exerted a constant pressure to reduce prices. Neither the ingenious manufacturer nor anyone else can fix these at his whim or caprice.
The material incentives to increased purchases need only to be brought effectively to the notice of prospective buyers.
Outline in Pitman Shorthand of the above passage
What is risk? Why should we take risk?
The assuming of risks, the shouldering of responsibility for bearing losses that may arise, is incident to all business and it is inevitable. However far one pushes the invaluable practice of insurance, this will not avail entirely and something must needs be left to chance. Nor, on the whole, would it be good for man if chance were altogether eliminated from life and separated from business. Uncertainty adds considerable piquancy to a drab existence though, of course, nobody desires convulsive or violent changes for the sake of variety.
Though we are, taking us all round, a very cautions race there are never wanting among us those willing to take the chances inseparable from business. And taking one with another the risk takers profit because, since more are ready to devolve risk from themselves than are ready to assume it, they can put a premium upon their services. Those services are real. What people call "remuneration for risk" is really earned.
Unless plans were made for a more or less distant future, no progress would be possible; but as soon as futurity comes into the account, chance enters too.
The time element - "the changes and chances of this mortal life," as it is expressed - implies uncertainty. A natural instinct prompts us to consider enjoyments now as more eligible than enjoyments that are to come. Few future events are quite free from uncertainty; guilt edged securities of the most unblemished reputation fluctuate in value, as anyone with secretarial experience will know.
The man that sinks a mine, even though he acts upon the advice of a geological expert, runs risks; for geology itself is not yet infallible. The emigrant frequently risks a good- deal. The rubber planter in Ceylon takes risks of political upheavals that might conceivably sweep away his property rights, takes some risk that the secret researches of scientists may devise a suitable substitute, takes risks of market, of weather, of any number of factors that no foresight can predict. Even when we take seats in the luncheon car, signifying by the act that we accept the offer of the railway company to provide a good meal for five shillings, we run risk of not getting the meal we anticipate. The company, too, runs some risk; for we may be short of money, or we may have no money to pay, or having it may evade payment.
Need of proper accounting
Unless a business man has an abundant knowledge of the fundamental art of calculating he will be hopelessly outclassed in the keen competition of modern times, and might even have to abandon a business life. An apparently trivial amount, a tiny fraction may make the difference between profit and loss and turn a favorable amount into an adverse balance. In no branch of commerce is this more evident than in transactions with the continent and other parts of the world. So many factors have to to be taken into consideration that the middle man, by whose offices such transactions are settled, must calculate to a nicety. He cannot afford to make a rough estimate, or leave the matter to an inefficient man or woman. Men or women inexperienced in figures would be useless in such offices.
He carries on his business of bill broking - of buying from those who have credit abroad and selling to those that seek credit - largely on borrowed money for which he pays interest. He cannot charge very high for his services for two reasons. Other brokers are available; and there are other ways of settling debts than the buying of a draft to send abroad. The debtor may procure gold and himself dispatch it, or he may send a security to his foreign creditor a railway debenture, a municipal bond, a mortgage on land, though he would not be indifferent as to the choice. For in a sense we can, in these days, so closely identified is property with the legal title to it, export our fields and factories, our railroads and canals, to pay for our imports. However, a debtor resorts to the export of gold or securities only as a temporary measure, when the bills of exchange are at a price he judges exorbitant.
What is this exorbitant price which determines his choice? It is a price beyond that which he would be required to pay for gold and for the expenses of sending it to his creditors, or for the security that would in the foreign country command enough credit to cancel the debt. When-we-are guided, as normally we are, by economic considerations, we elect the cheaper instrument for performing a necessary operation; we do not give good money when poorer will suffice. That would be detrimental to our business, as the audited accounts would afterwards show.