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Sorry, if it sounded snarky.<br />
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Your right, I don't have the skills or the knowledge that's why I'm asking. I want to know why the (succesfull) people who chose that path chose it over another.<br />
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Okay, so sounds like not the process for me, but doesn't mean I can't learn from it right?<br />
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So is this more helpful to a inventory heavy business, perhaps less useful for a high end Saas aiming at 20mil? Or more helpful for inventory?<br />
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What better way to change your mindset, than asking questions?
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Lines of credit work really well on businesses that have a lot of acounts receivable. My business for example, I have to run production on inventory, then ship to customer and invoice them, wait 30-45 days to be paid. So, I usually got a 60 day cycle between having to buy the product and getting paid for it. <br />
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A lot of industries don’t work on preorders. In almost every consumer packaged good market, you’d be laughed out of the meeting if you asked for upfront payment, let alone preorders. <br />
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If we’re talking about a Saas product or any other digital product, you can probably get away with using preorders to start the ball rolling. <br />
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I think the problem is that we see things like Kickstarter. People preorder sometimes up to 7 figures of product. That’s a great way to get <b>started. </b>But what we don’t see if the next few years of that business. In order to continue running products they need more funding. <br />
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Looking at my business again. When I’m running at peak efficiency, I’ll be turning a 30% margin. That’s industry standard for me. But at my lower scale, I’m turning 5-10% margin. If I kept going slow and steady, only operating off my profit, it would take me a couple years to get to a bigger order size. And this is assuming I never had any expenses. <br />
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The best thing you can do when evaluating the potential need is plotting out what your business looks like over the next 5 years. It’s important to know what the cash flow structure will look like.</div>
