Borrow a chicken to lay an egg --Wenzhou boss’s clever tips
A Wenzhou boss rented a five-story building and planned to build five automatic production lines for cosmetics. The budget investment was 20 million, but he only had 2 million.
One day at a dinner party, he met an expert. The Wenzhou boss said he planned to borrow money from the bank. The expert said, "I heard you are a layman in finance. If you borrow money from the bank, if your business is successful, you have to pay the interest. If it fails, the bank will bankrupt you. In addition, the bank will withdraw the loan and immediately drain your cash flow. As long as you use debt financing, your company will be on the verge of bankruptcy."
The expert went on to say that the highest level of borrowing money is not having to pay it back. If you follow my model, you can not only get money but also not bear debt risks. You don’t need to build all five production lines. A minimum production line can be built with 2 million. You only need to build one, and then register the first floor as a company, pull all the big customers over, and tell them that you are a brand owner, you don’t have a factory, and you don’t have technical content. As long as you place a deposit of 4 million for the goods with me today, you will not only get 4 million worth of goods, but I will also give you 30% of the equity. In the future, you can advertise that you not only have a certain brand but also an unmanned production factory. It is equivalent to becoming a shareholder of this smart production company without spending a penny. Register the second floor as a company as well, and then take out this company. 30% of the equity is given to a big customer who has paid 4 million for goods. And so on. 5 customers each pay 4 million, which adds up to exactly 20 million. Not only does it obtain 5 production lines without investing a penny, it also binds 5 big customers. Moreover, for the dealer, there is no risk, because he has to find someone else to do the OEM anyway. The only difference is whether to find someone else or you. If he finds you, he will also get the equity. If it succeeds, everyone will make money. If it fails, you don’t have to pay it back because the money is the payment for goods. This is called the space-cutting method. You use the least amount of funds to leverage your project. If you understand this operating model, you can do heavy assets at will.
The boss in Wenzhou said that the five production lines were no longer mine.
The expert said: What you want is the result of making money, why do you have to have the ownership of the asset? You just need to have control. Although the assets are nominally owned by others, each asset is related to you and automatically helps you make money every day. Therefore, many physical owners lack cash flow, which means they lack a specific financing plan.