Having been in business for myself for a quarter century, I know pretty much what it's like. Maintaining proper inventory, anticipating customer demand, surveying prices to determine what your market will bear, and finally, collecting bad debt, along with worrying about when someone else is going to set up business in your area and raise general hell by stealing parts of your customer base. There were many times when I wished that I had some way of absolutely locking in that customer, of guaranteeing that anytime they wanted that item, or service, they'd have to come to me.
The letter from the New York Mills municipal utility service came just the other day. It said:
"City Ordinance No. 117 went into effect in August 2006 (It is just becoming activated.) when it was published. The Ordinance requires that payment for all municipal utility service and charges shall be the primary responsibility of the fee owner (means house or rental property owner) of the premises served."
I like the way they capitalize "Ordinance." I like the way too that they say "The Ordinance." It gives it some bite, don't you think? What this ordinance means is that from now on, if you own a house in New York Mills which you rent out, you--not the renter--are responsible for the gas bill.
Pretty neat, you have to admit. As a private business owner, what wouldn't I have given for something like "The Ordinance." Another part of the letter says: "Accounts with past due balances become difficult to collect...etc, etc."
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Yes, I too always found past due accounts sometimes difficult to collect. Now, admittedly, a town's ability to collect past due accounts is complicated by the fact that during the winter months, they are prohibited by law from shutting the customer off. As the property owner, I have in the past offered to help them in this regard, should they wish to notify me of a tenant's overdue balance. Since they never asked, it was easy to assume they didn't want help.
Which of course they didn't. This passing of Ordinance 117 is, you have to admit, much easier for them, and much more effective.
All this raises some interesting questions. As I struggled to run my business, some things became quite clear: If you didn't charge enough markup on what it was you sold, you went out of business. Should you, however, charge too much markup, someone else would move in and sell it cheaper. All this is extremely stressful, for those of you who've never tried it.
This is where I've always admired the municipal natural gas supplier: Should you wish to buy your methane (natural gas) from someone else--sorry! There is no one else. That's an admirable situation to have a customer base locked into. Should your expenses rise--and methane certainly has, just like all the other heating fuels--you just charge your customers more, and should they complain, ah, yes, well--shrug your shoulders and blame the times, the weather, the market, whatever.
Of course, all this overlooks the fact that, for me to stay in business, I marked my products up some percentage. That percentage covered lights, insurance, labor, and all the other expenses of running that business, including uncollectible debt. Such is the basis upon which I stayed in business that quarter of a century.
Although the exact prices may vary, right now the wholesale spot market on methane is running somewhere around $7.00 per Mcf, which means thousand cubic feet. The city, which owns the gas franchise, charges customers somewhere around $14.00 per Mcf. (Although these prices vary, and may not be exact, they're pretty close.) One would first believe that a double markup would be enough to keep one in business, but apparently not.
At year's end, one of the calculations in which I was interested was the ratio of bad, uncollectible debt to total yearly gross, and if I kept it around one percent, I considered myself lucky. Lucky.
One must now consider unlucky the family who cannot afford to purchase a house. Unlucky, because the bottom line will now be that before we house owners can rent that family a house, we must not only have first and last month's rent for a deposit, we must also have the two worst month's utility bill. This might vary, but a rough figure approaching $1500.00 bucks isn't too far off.
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Hell, if they had that much money, they'd buy the house. Instead, these young couples just starting out, they'll go to some other town and rent. With them, they'll take their kids, which could have gone to our school system, and their grocery shopping, and their car repair, and their other purchases. Wouldn't you?
Like I said, it's a pretty neat deal to pass The Ordinance like this. We collect their bills; they spend the profit from their markup somewhere else. The bottom line is: I'm jealous.
I've got a suggestion: Maybe they could spend that profit on a course in properly operating A Business, instead of A Ordinance.
