On Sep 13, 2011, at 11:59 AM, GH wrote:
Hi John -
Thanks again for a great class. You made me think about my business in terms I never would have otherwise.
***You are very kind.***
I want to continue to expand my business globally.
***And you agree permission to do so comes from customers...***
My products are well loved by a small niche demographic. The product design, quality and functionalilty set it apart from any competition.
***Hold that thought...***
The only negative feeGHack is that the size is too big (it doesn't fit small men, asians or women) and that the single frame style is dated.
***Note the contradiction from above, well loved design, dated design... but the fact that you are redesigning based on feedback is the critical point...***
To counter that, I have worked with my overseas manufacturer to come up with a new smaller and more contemporary design.
***And a key resource...***
I believe that this new design has the potential to triple my existing business because it answers the only negative reponses I have received for my present product.
***That is a hypothesis you can test...***
The cost of the item mold for the new design and the intial production run of 300 is $10,000.
***300 pieces and $10,000 is $33 each cost... your wholesale is $15 each...you are plotting to buy high and sell low... I understand there is the frame mold to be considered, and what recommends the investment is the feedback. But you are guessing at whether you will sell enough to amortize this up-front cost. The chicken and egg... you need samples for signed purchase orders, signed purchase orders makes for easy financing. ***
I need financial help to accomplish this.
***I don't think you have a finance problem. I think you need to prove your hypothesis.***
Could you help me secure funding for this production run and expansion of my business. I am willing to offer equity in the LLC in exchange for investment in the future potential in the company.
***GH, I want to urge you to step back, and reflect on all of this. What I see is you are at the point where you have learned that design is key, and continuous improvement is how you serve the customer and thrive. This is a powerful basis for going forward. But I also know all too well the feeling of "if I can just get the product, I know I can make it work." In practice this usually comes to grief. The two forces are against each other. I think your challenge is to is to make the hard adjustment to move forward with the powerful force and dismiss the weak one.
I know these are not big numbers. I mean really, you cold flip burgers swing shift and come up with that $10K in six months, and if the thing went completely south $10K is no big loss. But that would be exercising the weak performance, when you could be exercising the strong performance instead with the time and resources.
Forget about finding investors, which you do not need, and forget about giving up equity, etc. What I see, and you'd have to do this anyway, is
1. Get samples to test. Not sure how to do this in your case, your product area. How close can you get to the real thing, how far from the real thing will sales reps tolerate as a sample for a test? This question I'd be happy to brainstorm on... next...
2. With purchase orders, your options open wide. At that point, if you cannot swing it yourself, go to who else benefits, the factory. Present hard numbers to the factory, which has excess production capacity. When they see purchase orders, they see you as a marketing arm for their productive capacity. Vendor financing is classic, but they have to have a reason to do so.
What I see is an existential problem... do you repeat tried and true but below par, or do you break out to another level? Maybe I am projecting, since I've managed, against all odds to pull it off a few times before, and I am again struggling to crack the shell. As I look back over the years I see self-employment as very much a self-improvement regime.
Anyway, I hope this makes sense, and I'd be keen to continue to work this problem with you, but I wanted to get my assessment out there...
John
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