Blog/News
Members of the ETC team are attending this week’s trade shows in Las Vegas. Join us at any of the following shows to learn how we can help your business grow and thrive!
Click to nominate your business for ETC’s new trade show grant.
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We are proud to announce that photos from our annual holiday party are featured in this month’s issue of Fashion Mannuscript on pages 14-15! We are thrilled that the event was such a success and grateful to all of our clients and colleagues who helped make it a wonderful evening.
Here’s to another prosperous year!
Business owners who rely on China’s abundant manufacturing facilities and low production costs may be in for a massive challenge. The ongoing trade war the US government has waged with China may not end by March, meaning more potential tariffs that could disrupt the global economy.
ETC’s own Mark Bienstock and other industry experts spoke to California Apparel News this week about strategies to protect yourself and your business from the effects of this ongoing international conflict.
Click here for details on our trade protection financing service.
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Sadie Keljikian, Express Trade Capital
The current government shutdown is the subject of nation-wide distress for myriad reasons. Sources are reporting that the shutdown, which is officially the longest in US history, has delayed public services like tax refunds, food, beverage and aviation product safety inspections, and millions of dollars in Small Business Association loans.
Generally, the SBA handles approximately $200 million in loans daily, but since the shutdown began, they’ve been unable to provide any financing aside from disaster assistance. As a result, hundreds of small businesses nationwide have waited a month for vital funds to help them grow and operate.
While many of the delayed loans are relatively small amounts, nearly 40% of them are known as 504 loans. These are meant to help business owners purchase real estate or costly equipment and can amount to $20 million or more. Regardless of quantity, many small business owners who rely on these loans are wondering how to bridge the gap until SBA loans are readily available again. The answer depends on where each business falls in the wide variety of industries the SBA serves.
Substituting these loans directly is tricky. If you or your business have very good credit, you may be able to replace your SBA loan with a regular bank loan, but it will likely take at least 60 days to reach you, which is decidedly unhelpful when speed is a priority.
We’ve discussed creative financing methods before, but not in terms of which methods are fastest. Depending on your budget, there are a few options that will give you access to quick funding for your business:
If you’re selling goods to creditworthy retailers, you can receive financing against your unpaid invoices. Provided you have all necessary materials and enough volume to qualify, you may receive funds within a day or two with this method.
Purchase order financing (or PO financing) is a method designed precisely for wholesalers who need help covering production and shipping costs while they wait for their customers to pay. So, if you have purchase orders from creditworthy customers and need to bolster your business’s funds, PO financing is a great option.
If you have a stockpile of unsold inventory and a solid track record of consistent sales, you can borrow against your unsold inventory. This can take slightly longer than financing against your receivables or purchase orders since it requires a field examination (as do any lending arrangements involving goods, equipment, or real estate), but can be a highly useful tool if you find yourself in a slow season.
If your customers pay you with credit or debit cards regularly, you may want to consider merchant cash advance options. Merchant cash advance arrangements, or MCAs, aren’t technically considered loans, but operate in a very similar way. At the onset, you receive a lump sum in exchange for a percentage of your future credit/debit card sales. With an MCA, you will receive funds very quickly, but it is important to note that this is by far the most expensive option, as interest tends to run extremely high among MCAs and compounds over time.
There are numerous ways to handle an unexpected lag in your business’s operational funds, but be careful not to let an urgent situation lead you to poor lending choices that could hurt you down the road.
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Joseph Stern, Express Trade Capital
In 1961, Ralph Cordiner, then chairman of General Electric, published a paper on the importance of private investment into space. Amid a cold war between the world’s super powers, Mr. Cordiner thought it prudent that the United States, as a proponent of capitalism, should beat the Russians in space not through government spending, but through private sector investment.
Since there was little economic incentive in space at the time, Mr. Cordiner’s vision did not play out. However, his words did not fall on deaf ears. With the rise of telecommunications came the first surge of investment into the fledgling space industry. Since getting to space was very expensive, the industry grew on the shoulders of telecommunications giants and the equally large corporations who supported them.
The idea that space is only accessible to governments and telecommunication elites changed drastically ten years ago with two developments: the private launcher and the cube satellite.
SpaceX
Space Exploration Technologies, now known as SpaceX, was a dream lead by PayPal founder Elon Musk. By 2008, SpaceX had run out of money and was on the brink of collapse. Then, without a feasible launch plan, NASA awarded SpaceX a $1.6 billion contract to resupply the International Space Station. Upon fulfilling the contract, SpaceX proved that it can launch cargo into space at a fraction of the cost of other government-funded launchers. Since then, other privately-funded launch companies have entered the space market though SpaceX remains the lowest cost launch provider, sending cargo into orbit for as little as $2,500 per kilogram.
CubeSat
The CubeSat was designed in 1999 by Jordi Puig-Suari and Bob Twiggs in an attempt to standardize satellite design. Within the CubeSat model, satellites are built to fit precisely into 10 cubic centimeter units: A 1U satellite would measure 10 x 10 x 10 cm, a 2U satellite would measure 10 x 10 x 20 cm, and so on.
The concept was relatively unutilized until 2013, when 88 CubeSats when up into orbit. Dropping launch costs, combined with ride sharing services which aggregate many satellites in on launch, drastically reduced the cost of launching satellites for people and institutions without much funding. In the short period of a few years, even public high school science clubs are now able to build and launch their satellites into space.
Today, CubeSats are fitted with receivers, cameras, mirrors, and other sensors, which collect data and relay information to other satellites or back to earth. In the past few years, a growing number of governments and business have awarded contracts to smaller and mid-sized entrepreneurs to build and launch satellites for a variety of purposes including tracking endangered species, forecasting weather, valuing agricultural land, and aiding in archeological digs. This marks a significant shift in the space industry landscape. The space space has grown from being the exclusive domain of mega corporations and large publicly funded government entities with immense resources to include smaller governments and businesses. The industry is wide open for participants and innovators of all sizes.
Conclusion
Lowered launch costs and standardized satellite production have made space accessible to everyone from a telecommunications billionaire, to an entrepreneur who grew up dreaming of exploration, to a high school student who may very well realize their extraterrestrial aspirations while still in school. Within a few short decades, Ralph Cordiner’s dream of a privately funded space industry is finally becoming a reality.
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Join members of the ETC team at the following trade shows this week/weekend to learn how we can help your business grow and thrive!
Sadie Keljikian, Express Trade Capital
There are numerous difficulties associated with starting a new business. Establishing sustainable practices that leave room for growth is complex, but crucial to building a successful company and brand. We’ve already talked a bit about smoothing out cashflow and creating a sensible production process, but now let’s talk about some of the vaguer aspects of building a business:
Establishing a brand is one of the most complex and crucial steps to building a successful business. Without a clear voice and intention, you are likely to get lost in a sea of businesses that sell similar products. The first step is to identify your niche: who is most likely to buy your products? Do your products appeal to an underrepresented demographic, or will you have to work hard to stand out among a large, commercially popular group?
Once you’ve figured out who your target audience is, you can start thinking about ways to more effectively appeal to that demographic. You may want to think about what else is popular or important among the people who buy your products and take a multi-pronged approach. There are a few ways to approach this depending on your priorities and preferences.
Most businesses have an overarching goal or company philosophy that guides their practices. Some businesses even take a stance on sociopolitical issues, as Uber, Lyft, and several others famously did after the 2016 election. While this isn’t necessarily a bad idea, it’s important to consider the fact that you may lose as many customers as you gain in doing so, depending on the issue and stance you choose. Some less divisive tactics include supporting a charitable cause and advertising your involvement or arranging a licensing agreement with a public figure (social media influencer, celebrity, etc.) who is relevant to your target demographic.
Another potential way to build your brand is to partner with a company in a similar field. Associating your business with an already trusted brand is a great way to establish yourself as a legitimate competitor and begin to form valuable relationships across your industry.
We’ve talked about the complexities of hiring a new team within a limited budget before, but the key factors to consider are universal. Before hiring anyone, identify your business’s needs and do some research to determine the most efficient solutions. There are almost certainly businesses just like yours who’ve already figured out the best approach through trial and error, so looking into their methods will often save you the trouble of learning the hard way.
Once you know what you need, boil it down to the essentials and act as quickly as you can without rushing the decision-making process. The benefits of hiring the right people dramatically outweigh the cost of additional salaries, especially when your existing team is massively overloaded with work. As long as you vet your potential employees carefully and hire the best people you can, you’ll have a solid foundation for your team as it continues to grow.
Employee resources and benefits are crucial to a growing business, but the vast array of options and variables can be difficult to sort out without prior experience. Obviously, you should work out your budget and do your research, but if you plan to secure health insurance first, it is wise to hire a trustworthy insurance broker. The broker will be able to walk you through the options available within your budget and explain any complicated jargon that may confuse you.
If you decide to establish your human resources department first, however, you may find that you’ll be better equipped to approach employee benefits without needing a broker. Many small businesses start out without a human resources department, leaving employment issues to the owner or individual department heads. This can work for a while, but as the business grows, those responsibilities can quickly become overwhelming, especially for those who aren’t HR professionals. Hiring an HR professional will free up other employees to take better care of their regular responsibilities, plus your HR person will be qualified to ensure that your business is operating within legal parameters and isn’t risking a lawsuit.
In both cases, guidance from an experienced professional is a massive advantage, especially since a wrong move could cost your company dearly.
Click to learn about our trade financing services.
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Sadie Keljikian, Express Trade Capital
Running a wholesale business is financially and logistically complex. There’s a lot to monitor and numerous variables can force you, the business owner, to think and act quickly to effectively manage unforeseen difficulties. Fortunately, most of these difficulties fall into a few categories of common problems that come up for small to mid-sized businesses.
Since these issues are common, solutions are readily available, though perhaps not obvious to less experienced business owners. Addressing them is just a matter of having enough experience to know how best to do it. Here are a few examples of common hiccups for which new businesses might not be prepared and what to do if they come up:
Designers and inventors consistently run into the same problem: how can I produce the required amount of my product by the time my customer needs it without overextending my resources? There are a few ways to handle this. One is to simply turn down orders you can’t reasonably fulfill using your current production processes, but that means you’d miss out on opportunities for growth.
Another approach is to hire a team to manufacture your products on-site. This is an expensive option since it involves hiring new employees and acquiring new equipment, but it allows you to control product quality and directly and provides a foundation for increased output. As long as the business doesn’t grow more quickly than your overhead can accommodate, manufacturing on-site is a perfectly viable option.
Alternately, many designers and inventors choose to outsource their manufacturing processes, which removes the need for additional employees and specialized facilities. Some creators aren’t comfortable handing their designs over entirely, usually because they worry that their design will be plagiarized or that product quality will suffer. While quality and security concerns are valid, sufficient research and vetting will indicate whether a production facility is trustworthy. As long as you do your homework, outsourcing is an effective and efficient way to increase production.
Many flourishing wholesalers lose traction because they pass on big orders from influential retailers out of fear that they’ll lose equity or acquire unmanageable debt. What a lot of new business owners don’t realize is that there are ways to supplement business-related costs that don’t involve expensive traditional-style loans.
One way to approach the issue is to apply for a line of credit with a bank or private financial institution. Just like a credit card, a line of credit allows you to defer expenses that might be prohibitive. As long as you and/or your business is creditworthy and you are able to pay on time, there is very little downside to securing a line of credit on behalf of your business.
Another option is to use alternative lending (or “alt lending”). Alt lending is a growing and thriving field in which lenders use creative financing methods, meaning that you don’t necessarily need perfect credit to receive funding. Private financial institutions who offer alt lending solutions can offer funding against purchase orders, invoices, equipment, and even unsold inventory. Most importantly, this method allows you to borrow small amounts as needed, rather than borrowing a lump sum and worrying that you’ll accrue excessive interest.
Click to learn about our trade financing solutions.
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Valued clients and associates:
Please be aware that our operational hours will be modified during the upcoming December holidays. We will open on Monday, December 24th and Monday, December 31st, but will close at 2pm both days. Our office will be closed on Tuesday, December 25th and Tuesday, January 1st.
Please plan your transactions accordingly and have a safe and pleasant holiday!
Express Trade Capital is inviting wholesale businesses to apply for the first annual ETC Trade Show Grant & Community Outreach Award! This award reflects our personal commitment to helping our community and encourages our friends in the wholesale industry to join us in giving back.
Requirements to apply for the 2019 ETC Community Outreach Award are:
We will announce a winner on March 1st, 2019. The winner will receive $3,000 USD toward a booth at a trade show of their choice.
Click here to apply today!