John Mullins from the London Business School spoke at Owen on September 22 as part of a book tour for his latest book: The Customer Funded Business. He described five customer funded models.
His book is full of stories of how the founders of companies like Banana Republic and Dell Computer got started using their customers cash. He gives reasons why customers might be willing to pay before they get the product: You have something they can't get anywhere else; your offering is superior in their eyes to that of other suppliers, or your give your customer something extra for paying sooner, i.e., better service, faster delivery, or something that looks great to your customers. Amazon Prime, for example where customers pay a yearly fee in advance for free shipping.
On the other side, get your suppliers to give you long terms because you are an important customer, or get your suppliers to hold your inventory until you need it. You pay cash when you pick it up from them, not when the manufacturer delivers it to them. And if you quickly turn the inventory into products your customers pay for in a few days, you need much less cash to operate your business.
The book is full of stories of how entrepreneurs convince customers to pay fast and how they persuade their suppliers to give long terms.
The Customer Funded Business by John Mullins, Ph.D., 2014, John Wiley & SonsWiley
The Customer-Funded Business: Start, Finance, or Grow Your Company with Your Customers' Cash, Hardcover – July 21, 2014
by John Mullins (Author) Hardcover $22.06 Amazon