By Lindsey Norris
It may seem unlucky that Innovequity’s founders Ben Bertrand and Mark Holtom launched their company in an economic climate that can best be compared to a credit ice age. But their timing could have been much worse. Their overhead costs remain very low, reducing the burden on the company’s cash flow.
Cash flow is often called a company’s lifeblood, and for good reason: managed poorly, it can bring down the healthiest business. For Bertrand and Holtom, the cash flow fun won’t really start until they sell the first Geometric Construction Unit. They plan to ask the customer to pay up front for the machine and overhead costs; their profits will come from royalties. “We will take a percentage of the savings the tool gives the home builder,” Holtom says. “Our actual profit will come on a per-square-foot charge.”
The arrangement makes the deal more palatable to homebuilders, but it also lengthens the amount of time the company must operate without a significant cash infusion. That calls for careful planning.
The Expert Panel
Our experts weigh in on Innovequity’s cash flow plan
Behind the Scenes
Innovequity’s CEO Mark Holtom on tightening their belts
Cash Flow Projections
A primer on long-term and short-term strategies
Links
Our roundup of useful links for start-ups from around the web
Category: Business
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