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Idea Cafe's CyberSchmooz
Financial Feasts

Financing message forum where you can get and give insights found nowhere else. Belly up to the table and request funding. Or tell your money tales. Any money talk is fair game except ads.

The Latest Hot Topics:

Show Me the Money!
Belly up to the Financial Feasts table and talk turkey about money... what to look for, where & how? All money talk is fair game. Go

 

Customers and Suppliers

1. What's Customer and Supplier Financing?

2. Who is This Good For?

3. When is This the Best Choice for Me?

4. When is This Not Advised?

5. Tips for Getting The Money.

6. Ingredients You'll Need on Hand.

7. Watch Out For...

1. What is Customer and Supplier Financing?

Loans or equity investments from the people who buy your goods and services or sell you theirs. They may invest in your company because you can more nimbly develop new products or methods they need, or you can provide a specialty they rely on, or they just want to rev up your growth to better serve their demands.

2. Who is This Good For?

An entrepreneur with customers or suppliers who have prospered from doing business with your company. Maybe you're the exclusive supplier of an item much coveted by your customer's competitors. Or you've become a crucial link in your supplier's distribution network.

3. When is This the Best Choice for Me

When you've been in business long enough to have a reputation as a reliable business owner, and built strong relationships with customers and suppliers;

4. When is This Not Advised?

When your customer or supplier may also be your competitor; being too close to them may give them access to information that may make them stronger and you weaker;

When your customers' or suppliers' competitors will stop doing business with you if they perceive you're too close;

5. Tips for Getting The Money

Stress the win-win aspect of such an alliance. Usually, there's got to be something in it for them besides the money you'll make; it has to help them improve their business or their lives.

Scout around in your supplier or customer's industry to find out if investments of the sort that you propose are normal or unusual. Then you can position your proposition as either routine or groundbreaking.

6. Ingredients You'll Need on Hand

7. Watch Out For...

Being too close for comfort. "If you're going through growing pains you might not want them to see that," says Mary Lore, a Farmington Hills, MI based entrepreneur and small business consultant. "Once they're an investor, they'll know a lot that you might not want a customer to know, like your costs, profit levels, and how you make the product or perform the service."

With a customer investor, you'll be guaranteeing at least one market for your goods and services. But other customers might be turned off and replace you. With a supplier investor, you may not have as much freedom to shop around for better deals on goods and services.

Investing could whet your investors' appetite for acquisition. They may decide that if they're bankrolling you, they may as well own you.

 

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