One of my aims for 2020 is to improve the visual look of our products. This goal involves a move away from labels to screen-printing directly onto the glass or plastic. We are excited about the change and spent the last few weeks designing artwork. We sent it to our glass supplier and then hit a major stumbling block when they demanded an upfront payment of £25,000. This amount is for eight weeks’ worth of glass.
We don’t have a credit account with them, which has been a conscious decision based on my experience of a previous business going bust. At the time my sandwich factory owed the suppliers a large amount of money, as the company got into trouble, we couldn’t pay, and so unsurprisingly, they stopped supplying us. We closed soon after costing my fifty staff their jobs.
The lesson I learnt through that dark, difficult period was to avoid taking stock on credit. It’s ok when business is good, but when times get hard, and a company is losing money it is too easy to keep ordering from your suppliers without realising that you won’t be able to pay when the invoices fall due.
As Valentte has grown, we have continued the policy of paying upfront for our stock and owning almost everything in the building. This strategy works well when the items we purchase are stock items and can be bought off-the-shelf. It works somewhat less well when the supplier must manufacture something specifically for us, with high minimum orders and long lead times.
So, what to do?
We asked for a credit account which the glass supplier declined. We could have borrowed the money, but why put ourselves in debt. So, in the end, we have decided to use the new artwork on clear labels which will give a similar look and feel to the screen-printed items.
Sure, it’s disappointing, we were all excited about the change, but I remind myself that growth is best when we are truly ready for it.
Running Valentte over the last year has been a pleasure as we have reached a level of financially security, with money in the bank, debt-free and plenty of stock on the shelves. Why put all that at risk and me under financial pressure to make a cosmetic change to our products.
We will know when the time is right to make the change as one of two things will be true, either the supplier will offer us a credit account, or we have enough spare cash in our bank account not to feel the pressure of tying up £25,000 in extra stock.
We live in an age that encourages us to take risks, dream big and have it all today using easy, cheap credit, but sometimes the right decision is to wait until we can afford things. This may be next month, next year or maybe not at all!
By not giving us credit, the supplier is telling us that they are not ready and maybe we are not too. It’s hard to hear that message, but I remind myself that our time will come. I remain as always, the eternal optimist.
Together, we climb the mountain, not in giant leaps but one small step at a time.