Why Startups Focus on Supply Chains & Cash Flow


If you’re getting ready to launch a startup, remember that lenders will want to see cash flow statements when you apply for loans or lines of credit. That’s because net cash income is the most realistic way to measure performance in an era where so many entrepreneurs use credit to start companies. Banks and other financial institutions understand that owners who enjoy consistent and substantial cash flow are more apt to find long-term success. But income isn’t everything. Supply chains are the other component of long-term financial success. Running any company is impossible without a steady stream of goods, equipment, and other operational assets.

The same is true for individuals who apply for mortgages and other types of loans. Lenders measure DTI, or debt-to-income, to see how much available, spendable capital an individual has each month. But in the business world, knowing how to invest is the most efficient way to gain access to cash equivalent assets. Niches like vending machines, real estate, dividend stocks, rental services, and bullion brokerages generate income flows better than most others. Here are details about how supply chain principles, a steady cash flow, or a combination of both keep startup entities afloat.

Retail Vending Machines & ATMs

Vending machine businesses have been around for generations, but the newest variation on the theme is related to Automated Teller Machines or ATMs. Those with modest investment capital can begin operations within a few months. Step one is to shop around for new or second-hand machines. Most vending machine merchants need access to a fresh supply of new or refurbished units. When supply chains break down, owners must rely on older machines and risk losing customers who want the latest vending technology, like credit card acceptance, innovative refrigeration, and secure payment systems.

Consulting a business broker is wise because they can offer you an array of options, instant machine placement, and explain all the operational expenses. Well-placed vending machines and ATMs can perform well in any economy, but exceptions exist. Do enough research and make a detailed financial plan before signing machine purchase agreements and committing to location rent. Try to ensure the integrity of the supply chain and a steady flow of income.

Real Estate

A real estate investing business comes with several unique advantages. However, whether you flip single-family homes or put money into fractional shares of commercial properties, keeping an eye on real-time income is imperative. Owning tangible assets like land and buildings means dealing with multiple operational expenses. The financial health of the business depends on owners making detailed financial statements. That’s the only way for an entrepreneur to keep tabs on dollars in and dollars out.

The primary responsibility of owners is to educate themselves about cash flow and learn how the core accounting principle applies to anyone who runs a real estate-based company. Renovating properties during the flip process is only possible with continued access to numerous goods, like carpentry tools, shingles, lumber, etc. Supply chain knowledge is a central part of every real estate owner’s repertoire.

Bullion Brokerage

Acquiring precious metals can be a logistical challenge depending on where you live. Always check supply chain dynamics in your area before launching a bullion brokerage. In addition to supplies, you’ll eventually need to generate enough capital to cover daily expenses and provide for a decent income. A bullion brokerage can offer significant benefits if you’re patient and willing to spend several months building up a client base. Even though operating expenses are meager, investing a substantial amount in inventory is essential.

Precious metals are costly; you’ll need a safe depository and enough gold and silver on hand to supply buyers at a moment’s notice. Some investors purchase turnkey bullion brokerage businesses for a fast start. To keep markups as low as possible and attract bargain hunting customers, acquiring metals from a third party is not practical after you make a sale. But, once you reach critical mass with enough inventory, every sale generates instant income because the operational overhead is almost non-existent. Most entrepreneurs who follow this route spend up to a full year acquiring customers before enjoying regular, material income from sales.