Masonry Magazine May 1962 Page. 6
Financing for the Mason Contractor
(Continued from page 5) sources of money differ, depending upon the kind of money you are talking about. When I say "kind of money," I would like to break this down by using length of time in defining kind of money. For example, there is permanent money. This permanent money is the net worth, that portion which you must always have in your business. Then there is long term money; money which, if things are handled properly, can be repaid over a long period of time; long term being defined as a term in excess of one year. Then there is short-term money, defined as less than one year. It must be repaid.
Permanent money comes from certain sources, and those sources are generally classified as investors; and those investors of permanent money must be paid. Their pay is their share of the profits, or their share of the losses. They are your partners; in a corporation, they are your shareholders. And, although we got started fifteen minutes late, I am not going to run over too long, but I can't help but tell you a little story, because I'm fresh on this story: Approximately four weeks ago, we tried to buy a company and a property, located in a section of the country which I will not mention, for fear that my competition will know where I am interested. We negotiated a deal with some people who owned the business that we were trying to buy, and who had an option on the property which we wanted.
We made what we considered to be a fair proposition, which they turned down because they just knew they could do lots better, and they were not going to share that much of the "pie in the sky" with us. This "pie in the sky" is always a much bigger and juicier pie when you look at it years ahead than when you actually get there. You all know that. But nevertheless, if we don't seek it out in advance, we just quit, and that wouldn't be good for industry.
Well, to make a long story short, they turned us down because they knew they could keep this profit for themselves and make a lot better deal. Last Saturday morning at 11:00 o'clock-and, of course, you know in the last forty years times have changed; the only ones who work Saturday morning now are the bosses we received a telephone call from these people, and they said, "We have been thinking this over, and we have decided that we will take the proposition you made four weeks ago, if you are still interested."
We said, "Yes, we are still interested," and they said, "There's only one hitch. Our option expired on January the 31st. We were not able to get a written renewal, but the man from whom we had the option said that he'll talk to us next Monday morning. That means day after tomorrow at 11:00 o'clock, and I am sure that if we put up enough money, we can get that option renewed." "Well," we said, "it is now 11:00 o'clock Saturday morning, and there is one hell of a lot we have to know REMEMBER THIS. Regardless of What Blade You Use! SAWS before we could make this deal." And they said, we're sorry; we did wait too long. But if you want the deal, you can do the deal you wanted to do four ago."
Well, to make a long story short, I took two of me presidents, two of my best technical people, and a s rapher, and we got on an airplane and traveled a ha on Sunday, and we worked till a quarter of 1:00 м morning, getting an agreement that we were will accept. Then I drove 250 miles before 11:00 o'cloc terday morning to pick up the option. When we got the man said, "We are very sorry, but we are not to give an option to anybody at any price. As a ma fact, we have already made a deal with somebody And this man who was making the deal with us li cried, because he is bankrupt. His assets are some thousand dollars short of his liabilities. The deal going to make with us, that we were willing to would have pulled him out and put him on his fee he didn't believe that permanent money should get a of the profits, and he will file bankruptcy proceedi the next week.
So, permanent money, gentlemen, and the investor invest that permanent money, are absolute necessi a great many businesses, if permanent capital is sary. Now, if you have a business that doesn't me forget it. But if you do, you must have sufficient pers capital, and if you have to have investors, you m willing to give them a share in the profits, becaus are going to share in the losses.
Now, long term money can be borrowed from inv Some investors prefer to lend money and secure selves, so that they don't take any share in the they hope, and they are are willing to forego a sk the profits for interest. Long term money can also ranged for through various financial institution have got a new one today, these SBIC's. Other fis institutions: Certain banks, insurance companies, funds, and others too numerous to mention are in th term money markets. In some cases, these people d a share of the profits without any losses in addi interest, and in some cases it is worth it.
Then on your short term borrowings, of course, no there are just three sources. One source whose bus is, the banks. Your bank credit should be perfect. N pany, even those who don't borrow, should fail t lines of credit arranged with banks. There is nev problem in borrowing money from a bank, if you w banker, you would lend it. You would never get down by a bank if you would have studied what can do and can't do, and you are a good enough to know that you would do it.
Then there are other people who lend you show money. Sometimes your customer will lend you sho money, if you bid the job low enough so that he (Continued on page 15)
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