Comment by amirhirsch

4 hours ago

Good luck! One valuable differentiation you could provide is a line of credit. If you can’t win on price, you can help your customers win on cash-conversion cycle.

I’ve been making hardware for 20 years. My highest-volume product was Flybrix, a LEGO drone kit manufactured by Seeed and UniPrecision in China and by Sparqtron in Fremont, California. I’d be happy to work with you on a v2 reboot: Flybrix Swarmz, because every American high school needs a drone swarm.

Beyond that, I’ve worked with many domestic suppliers and built ITAR-controlled products as well. Even without owning the production capacity, if you can offer Net 90 on fabrication and extend credit for components--beyond existing DigiKey, Arrow, Mouser, and vendor credit lines--then I can build products and get paid without putting all the capital at risk upfront.

Factoring is expensive, especially against a purchase order rather than an invoice, and I don’t know of anyone offering working-capital credit based solely on an SBIR award.

Credit is what makes the spice flow.

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amirhirsch

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willcarkner  3 hours ago

Wow. Sounds like a super interesting product. Hadn't considered lines of credit yet, but definitely would be valuable to some higher ticket customers.

  • structural  3 hours ago

    We currently use a small US contract manufacturer that works pretty much as you say. The turn times are terrible (7+ weeks, not 7 days), and this is a major issue, but there are exactly two reasons we continue to use them:

    1. Line of credit - we are not billed until we take delivery of tested product. 2. Willingness to handle high mix, low volume products. One product line example: a dozen SKUs with 95-98% parts in common on 2 PCBs, a single set of parts (that we aren't billed for up front) and quoting to build 20 of SKU 1, 50 of SKU 2, 10 of SKU 3, etc. without charging 2-3x the price.

    We manufacture in the research / test equipment / defense space and I've heard similar things from other small hardware companies that are like us.