How to deal with small amp builders?

[Anonymous]

.....Taking a deposit can in the long run be considered part of a very smart business model in that the deposit serves as revenue that can keep the company going!.....Revenue keeps the doors open, keeps you able to provide warranty support to older customers if the need shall arise (knock on wood I haven't had to yet), keeps you able to invest more in the business (like tools & equipment to be more productive), etc.

Deposits are not revenue. How can you be running a business and not know that?

On this point, I have to agree with Steve.

Deposits are NOT revenue - at least not in an accounting sense. They are actually LIABILITIES.

DR Cash
CR Unearned revenue liability
To recognize the receipt of a deposit on an unfulfilled customer order.

Once you complete the amp and deliver it to the customer, you can then convert the deposits into revenue.

DR Unearned revenue liability
CR Revenue
To recognize revenue on cash deposits, upon completion and delivery of merchandise to the customer.

Unless you are applying some kind of "percentage of completion" approach to revenue recognition - which is not typically permitted in a manufacturing business such as building guitar amplifiers - deposits simply do not qualify as accounting revenue.

As such, to say that deposits act as revenue to keep the company going is not accurate. You are in fact treating the deposits as financing to keep the company going. And, I can guarantee that if a builder told a customer making a deposit on an amp that "those funds will be used to cover the costs of servicing previous customers' amps", the customer would ask for a refund! This situation is a PERFECT real-life example of "borrowing from Peter in order to pay Paul".

What's funny is that this is a rudimentary business principle that anyone starting one should know. Most of these endeavors are not real businesses, of course...

Really, the reason we put up with the business practices of small gear guys is our own faults. We buy into the "voodoo/mojo" of the "artistses" building the amps. We hear some clips, a "cult of personality" forms around the builder and then we all just "gotta have one". So we deal with deposits and bullshit delivery times that get exceeded by amazing amounts and poor, rude customer service, because we just "gotta have one" from this particular "tone genius", even though this dude hasn't the slightest idea of how to run a business. The guy, of course, gets bombarded with initial orders, can't deliver, gets overwhelmed, gets frustrated and we get what we get.

BTW, I'm just as guilty as anyone else here on this point. I'm an "investor-customer" in several gear endeavors currently, myself. I've decided what "tone magicians" stuff I just "gotta have" and I've put my money down and I try to be as patient and have as little interaction with the builder as possible and hope for the best. I fully admit that this makes me part of the problem that I've been pointing out in this thread, but what can I say, I'm a weak gear freak and I just "gotta have it" so I'll continue to get taken advantage of by some and maybe I'll run into some builders who'll actually deliver in a reasonable timeframe, who knows... Until then, I guess it'll be, "Yes sir, may I have another..."

As a builder though, once I get my amp to market, I'm taking a different approach. I've got the hard-earned capital to make it happen and I'm willing to roll the dice that there will be demand. That is all I'll say. I don't want to spend my days answering emails from customers waiting for me to deliver something. It would drive me crazy and I don't want to end up with a bad rep over it...

Steve (the weak gear freak)

 

[rlord1974]

I'm sure there's lots of "good stuff" in here.....

 

[CECamps]

Where this business model falls apart is when people take money up front, tell you delivery in 3 months and then it takes over a year, with non-existent communication, or you never get anything until you threaten and then you finally get your money back instead of the gear. So this "business" gets an interest free loan for over a year, while you get nothing. I don't think people mind paying up front so a builder knows what the demand is so they can order appropriate amounts of parts, etc., but unfortunately, the builder usually has no idea what the lead times are going to be for sourcing and in many cases, is still doing R&D on your dime. Now you just wait and wait and wait... Then the builder starts getting tons of calls from the customers who are waiting and gets frustrated, taking it out on the customer. And I bet to a large degree, the builder doesn't feel responsible for the delays because his suppliers are causing the delays. In truth, it was his fault from the start due to poor planning.

Sure, totally agree. But what you just described wasn't the fault of an up front payment. It was the fault of someone who wasn't cut out for the manufacturing business. Plain and simple.

Look, I've learned all this first hand in the process of bringing my amp to market. Everything has taken 2-3 times as long as I thought it would and you make mistakes that require re-work, you have to wait for backordered parts, etc., etc., etc. Why not just get that all taken care of ahead of time on your own dime and make a run of amps and sell them when you have them. That way, no angry customers are calling you when you exceed delivery times because you only sell when you have stock. You can do a run of 10 amps, sell them and then do another bigger run, etc. If you really believe you have something that people want to buy, why not just do it that way? You have to put your money where your mouth is (sorta speak...) IMO...

I wouldn't ever use customer deposits to fund product R&D. That's just silly and ridiculous. And again, if it is happening, it is being done by people who are clueless to the business of manufacturing products.

Every amp I put into development gets developed on my own dime. Brigand, for instance, took around $4k of my own money to prototype and develop. Before it went to market, I had to understand--just like on any other amp model I produce--exactly how the production flow needed to work from both a logistics and process standpoint.

But I still don't have the disposable cash to do a production run of 10 amps. I'd love to, but I don't. So when someone orders one, they give me a deposit, I quote a delivery time, I keep them updated through the entire build process, I deliver the product when I say I will, and the customer is ecstatic 100% of the time. Yes, I said 100% of the time.

Finally, it's like someone else said here, if you don't have the startup capital to start a business, too f'in bad, man - you can't start a business!

I can dig it. Like I said, I invested tens of thousands of dollars into my business before I was capable of even opening the doors.

You shouldn't build a business on the backs of paying customers waiting for you to get your act together. Now on completely custom amps, I get that it is different. You are designing something from scratch for someone. In that case, the customer should realize it is going to be really expensive and take a long time. If the builders are up front about that, there should be no problem.

Steve

I agree you should "have your act together" before going to market. Just not sure there is a one-size-fits-all definition of that for all businesses. But how do you build a business without customer support? I don't get it. Even if you are fortunate enough to have a lot of personal disposable income to make a bunch of products, how is product inventory the end-all measure of a "built business?"

See, this is the funny thing to me. As the customer, why do I give a shit? This is a "YP", not a "MP", as they say...

You think the customer's of the software company I work for would put up with, "Well, hey man, sorry I couldn't deliver you the software you purchased, but my supplier couldn't get me a new test machine and I lost one of my key designers and well, shit man, developing software is a touch racket, ya know, there's a lot of testing and builds and shit that goes into it..."

Please... my ass would get thrown right the f outta there and they'd go to my closest competitor and buy from them. That is how business works, yet it seems many in the gear business don't get it at all...

I think we may have run into a bit of an apples/oranges comparison there.

Once again, I have to say, build a run of amps and sell them when ya got 'em. All problems solved. If you can't afford to fund that - you have no right to be in business anyway.

Steve

Really? I guess O'Netics has no right to be in business as a transformer manufacturer--even though Bud has been in the industry for basically his entire adult life and the business itself has been around for 9 years. EDCOR as well, they need to close their doors too.

Steve, I respect your opinion even if it is extreme. But honestly, here in the US everyone has the right to start a business under whatever premise they choose and go about it in whatever way they choose. Some will succeed and even more will fail.

But I guess you're telling me I have no right to be in business. Right? Even though I have never fielded a single customer complaint in over two years of being in business, and even though I have always delivered on my promises, and even though my way of running my business is working and I am growing as a company--I should just close up shop because I can't afford to allocate cash to do a production run of 10 amps.

Wow, man.

Well... geez man... Then I guess that's too bad then, huh? Come back when ya have the capital to do it yourself the, k? Not my problem - you're problem...

I can respect that. But that's not the real world of small business in the US, brother.

Dude... once again, I have to laugh here... Can't you see that everything you are saying here is THE PROBLEM with people in the gear business?

No I can't see it. What I see is you correlating two things that aren't related to one another. I don't care how much money you have, if you suck at business and suck at manufacturing, you'll piss people off and go out of business.

"does it make business sense to take out a loan for a significant chunk of change to build up product that doesn't yet have any demand?"

Are you kiddin' me? I mean seriously, this is what business is all about! The people I work with start software companies from scratch, ok? We get an idea. We build a business plan. We convince ourselves there is demand. We go talk to some companies who have the problem they are trying to solve. We invest OUR time/money to build a prototype. We then convince angel and VC investors that this can be a business and get the capital to build the software and the company. Is there risk here? Of course, that is what starting a business IS! Have we invested a significant chunk of change and time? YES, of course! 'Cause that is what it takes to start a business.

Awesome, glad to hear it. Are all industries equal? Are all approaches to business equal regardless of the size of the company? This is news to me, and I've owned 3 businesses aside from working manufacturing my entire adult life.

Waiting on custom made parts? Too f'in bad.
Out personal funds for licensing, miscellaneous services and fees, and company assets so you can simply do business? I, the customer couldn't give a shit less.
You still have to eat and pay rent, and if you have a family, they still have to eat too? Then get job, sir!

I wouldn't expect the customer to care. But we're talking about small businesses here. This is the nature of them.

And yes, I have a full time job on top of running my business. I couldn't live off the business yet.

Look, I'm being dramatic to make a point you about business, which you don't seem to understand. No one cares about your problems. If you have the balls and cash to put it on the line and start a business, this is the world you have to deal with. Business is not charity, it is a ruthless endeavor and just because you're (not you specifically, bro - I'm generalizing here) an "artiste" designing amps, doesn't mean you don't have to deal with that reality. As I've said, if I tried to have this kind of argument with my customers, I'd get laughed out of their office...

I understand business full and well. Not only was it my field of study in college, but I've owned three that I started personally (two of which I sold), and have worked in just about every major side of manufacturing my entire adult life (technician, production, QA, engineering, configuration management, and admin).

Painting an over-generalized, carte blanche picture of how EVERYONE across EVERY industry (regardless of size or resources) should conduct business I think more represents a fundamental misunderstanding.

I think we agree on a lot of points. But I'm afraid I don't agree with your cum hoc ergo propter hoc outlook in regards to why the small amp manufacturer subgroup has so many failures.

If you want my honest opinion on it, it has more to do with the ease of entry inviting people in that shouldn't be there. It's easy to go buy a plexi kit, build it, and then become an "amp builder" and start a "business."

But a ripped off circuit and some money exchanging hands does not a business make.

I'm speechless... Once again, are you kidding me? If you need to take my deposit to "keep your company going" then you are not a business.

No? Companies don't need revenue to stay in business? Wow, that's news to me!

Like I said before, but you conveniently avoided, businesses go through phases of growth and development. Along the way, revenue streams and cash flow evolve.

Deposits are not revenue. How can you be running a business and not know that? I've been in R&D since 2008. I hope to sell my first amps this year. I will not take deposits, I will build the amps on my dime in runs and sell them when I have them. If you need to take deposits to get the parts to build the amps, you are building your business on the customers backs. They are really investors. That is ridiculous. There should be no reason to take deposits if you have the startup capital to get a business going. And once again, if you don't, you don't belong in business.

Money received from customers is not revenue? I can't fathom why.

I currently have almost $10k in parts inventory sitting behind me (at my cost, not retail). But my business is run a certain way and taking customer deposits plays into that in the way that it does. There is a big picture to be looked at.

Do you run your business seeing only as far as your nose? Or do you have a plan? Dumbing down business to "build a bunch of amps and then sell them--then repeat" is kind of silly to me. Just like "take money for amp, build it, and ship it" is silly to me. But that is based on my plans for my business, my goals, my ideas for growth and my approach to the industry.

We obviously look at the amp manufacturing industry differently. I'm playing a different game than most, because I'm not ripping off Marshall or Fender circuits, slapping my last name on top, and throwing them into the sea of others doing the same thing. That by itself puts me in a different subgroup of the industry in terms of target audience and how to deal with them, believe it or not. I'm sure you'll disagree with that, but it is what it is.

You mean you never would have gotten here without your patient investor-customers, not customers. In fact, on the investment side the investor-customers never got any return on their investment. That is bad business. I'm sorry, but that is a fact.

Steve

So my customers ordered products (many of them custom, one-off builds) and got them when they were told they would, then raved about how happy they were--and it turns out it was bad business?

Steve, with all due respect, false attributions about my business on your part don't make them fact.

 

[CECamps]

On this point, I have to agree with Steve.

Deposits are NOT revenue - at least not in an accounting sense. They are actually LIABILITIES.

DR Cash
CR Unearned revenue liability
To recognize the receipt of a deposit on an unfulfilled customer order.

Once you complete the amp and deliver it to the customer, you can then convert the deposits into revenue.

DR Unearned revenue liability
CR Revenue
To recognize revenue on cash deposits, upon completion and delivery of merchandise to the customer.

Unless you are applying some kind of "percentage of completion" approach to revenue recognition - which is not typically permitted in a manufacturing business such as building guitar amplifiers - deposits simply do not qualify as accounting revenue.

As such, to say that deposits act as revenue to keep the company going is not accurate. You are in fact treating the deposits as financing to keep the company going. And, I can guarantee that if a builder told a customer making a deposit on an amp that "those funds will be used to cover the costs of servicing previous customers' amps", the customer would ask for a refund! This situation is a PERFECT real-life example of "borrowing from Peter in order to pay Paul".

This is under the assumption of a pointed context--that there are no parts in stock when a deposit is taken and the funds are used to buy all the necessary parts.

Guys, I know that's the way a lot of folks operate. But as I mentioned before, it ain't all cut & dry across all small businesses. Be open to that possibility.

As I mentioned before, I am sitting on a tad under $10k of parts inventory. That inventory could go to build any number of different combinations of amps. Until I have what I feel is a good amount of sales trending to go by, I'm not gonna do any huge production run commitments. I'd rather use the parts to meet actual known demand. Crazy, huh?

Of course, according to Steve that's probably "bad business."

 

[rlord1974]

Hmmm.......should I go for the small or the large?.......

 

[Shawn Lutz]

get the large rlord but you have to pay 1/2 upfront to the corn farmer first though. I hope your not jonesing for popcorn too badly. You have to wait for the corn to grow, be harvested, shipped and then made before you can eat any

 

[rlord1974]

On this point, I have to agree with Steve.

Deposits are NOT revenue - at least not in an accounting sense. They are actually LIABILITIES.

DR Cash
CR Unearned revenue liability
To recognize the receipt of a deposit on an unfulfilled customer order.

Once you complete the amp and deliver it to the customer, you can then convert the deposits into revenue.

DR Unearned revenue liability
CR Revenue
To recognize revenue on cash deposits, upon completion and delivery of merchandise to the customer.

Unless you are applying some kind of "percentage of completion" approach to revenue recognition - which is not typically permitted in a manufacturing business such as building guitar amplifiers - deposits simply do not qualify as accounting revenue.

As such, to say that deposits act as revenue to keep the company going is not accurate. You are in fact treating the deposits as financing to keep the company going. And, I can guarantee that if a builder told a customer making a deposit on an amp that "those funds will be used to cover the costs of servicing previous customers' amps", the customer would ask for a refund! This situation is a PERFECT real-life example of "borrowing from Peter in order to pay Paul".

This is under the assumption of a pointed context--that there are no parts in stock when a deposit is taken and the funds are used to buy all the necessary parts.

Guys, I know that's the way a lot of folks operate. But as I mentioned before, it ain't all cut & dry across all small businesses. Be open to that possibility.

As I mentioned before, I am sitting on a tad under $10k of parts inventory. That inventory could go to build any number of different combinations of amps. Until I have what I feel is a good amount of sales trending to go by, I'm not gonna do any huge production run commitments. I'd rather use the parts to meet actual known demand. Crazy, huh?

Of course, according to Steve that's probably "bad business."

Craig, not to beat a dead horse, but just because you happen to have some of the parts on hand you will need to fulfill a given order when you receive the related deposit does not, from an accounting sense, mean that the deposit can be treated as "revenue".

You do not get to recognize revenue on your income statement until such time as you have fulfilled your obligation to deliver a specified product (i.e., the amp) in the future. Until that product (i.e., the amp) is completed and delivered to the customer (we will ignore the various FOB shipping possibilities for the sake of simplicity and as they really have no bearing on the discussion), the deposit is not revenue. It is a cash receipt that is treated as a liability for accounting purposes. It does form a part of your business' "working capital" as it represents cash on hand to fund business activities, but it is not revenue.

Here's a very simplified example of why a deposit is not permitted to be treated as "revenue" for accounting purposes:
1) You take an order from a customer. Customer remits a deposit.
2) You recognize the deposit as revenue, even though you have not yet delivered the product and are not expected to do so for another 4 months.
3) Your customer changes his mind due to a delay and requests a full refund.

Does the refund represent an "expense"? Of course not! How can the return of a customer's cash represent an expense, when you never did anything to "earn" it as revenue to begin with?

When a business takes a deposit, it is essentially acting as a bank and holding a deposit liability until such time as the product or service initially contracted for is delivered to the customer.

All that being said, I'll tap out of this argument now.

I am still intrigued by that amp of yours (and I too have been guilty of placing "deposits" with builders in the past ). Can I find clips anywhere? Please let me know!

 

[rlord1974]

get the large rlord but you have to pay 1/2 upfront to the corn farmer first though. I hope your not jonesing for popcorn too badly. You have to wait for the corn to grow, be harvested, shipped and then made before you can eat any

 

[LP Freak]

Can I get another beer please?

 

[rlord1974]

Can I get another beer please?

Amen!

 

[Anonymous]

Sure, totally agree. But what you just described wasn't the fault of an up front payment. It was the fault of someone who wasn't cut out for the manufacturing business. Plain and simple.

True. The up front 1/2 down adds to the customer frustration though. I just don't see why it is necessary.

But I still don't have the disposable cash to do a production run of 10 amps. I'd love to, but I don't. So when someone orders one, they give me a deposit, I quote a delivery time, I keep them updated through the entire build process, I deliver the product when I say I will, and the customer is ecstatic 100% of the time. Yes, I said 100% of the time.

That's great that your customers dig your amps. I don't understand though. If you have sold amps, you've made a profit, right? Why not put that profit back into the business and do a run of amps? What are you doing with the profits? What was your business plan to get to the point where customers could just buy an amp from you without waiting or deposits?

I agree you should "have your act together" before going to market. Just not sure there is a one-size-fits-all definition of that for all businesses. But how do you build a business without customer support? I don't get it. Even if you are fortunate enough to have a lot of personal disposable income to make a bunch of products, how is product inventory the end-all measure of a "built business?"

I never said that product inventory was a end-all measure of business and I never said you shouldn't have customer support. No idea where you got that from what I've written...

I think we may have run into a bit of an apples/oranges comparison there.

There's that mentality again. No it isn't apples/oranges, it is a generic business thing. In fact, it is the same exact thing.

Really? I guess O'Netics has no right to be in business as a transformer manufacturer--even though Bud has been in the industry for basically his entire adult life and the business itself has been around for 9 years. EDCOR as well, they need to close their doors too.

Just because someone takes a deposit doesn't mean they are doing it because they can't keep stock. You have this guy build you custom transformers. He wants some skin in the game from you that you are actually gonna buy them. Read what I wrote before about custom stuff - I totally get deposits on that because it is a one off for one person.

Steve, I respect your opinion even if it is extreme. But honestly, here in the US everyone has the right to start a business under whatever premise they choose and go about it in whatever way they choose. Some will succeed and even more will fail.

Fuck yea, man. Anyone can do whatever they want and do it any way they see fit. And in this industry it'll work because of the "cult of personality" and weak gear freaks I brought up before. Won't fly in other businesses and it doesn't mean I have to like it or consider it a real business...

But I guess you're telling me I have no right to be in business. Right? Even though I have never fielded a single customer complaint in over two years of being in business, and even though I have always delivered on my promises, and even though my way of running my business is working and I am growing as a company--I should just close up shop because I can't afford to allocate cash to do a production run of 10 amps.

As I said, it's a free country. You can do whatever you want. There some things you've said that are just flat wrong about business like the idea that deposits are revenue and that it somehow doesn't make sense to rick your cash not knowing demand, but that is moot. You and your customers seem to be diggin' what you do and I've got no problem with that. It isn't going to change my opinion of how I think a business should be run... Once again, I'm not telling anyone what they should do, just what I think...

I can respect that. But that's not the real world of small business in the US, brother.

Doesn't mean I have to like it.

No I can't see it. What I see is you correlating two things that aren't related to one another. I don't care how much money you have, if you suck at business and suck at manufacturing, you'll piss people off and go out of business.

That has nothing to do with what I wrote. I'm sorry you can't see my point.

Awesome, glad to hear it. Are all industries equal? Are all approaches to business equal regardless of the size of the company? This is news to me, and I've owned 3 businesses aside from working manufacturing my entire adult life.

The generic principles of running a business that I'm speaking of can be applied to any business of any size, in any industry. I haven't discussed anything that is size specific except using VCs and angel investors and the only principle I'm exhibiting is raising capital. Hey man, you've owned three businesses and are calling deposits revenue, so I dunno what to say about how your experience correlates to general business knowledge.

I wouldn't expect the customer to care. But we're talking about small businesses here. This is the nature of them.

And your point is?

I understand business full and well. Not only was it my field of study in college, but I've owned three that I started personally (two of which I sold), and have worked in just about every major side of manufacturing my entire adult life (technician, production, QA, engineering, configuration management, and admin).

Hey man, no need to give me your resume. You have nothing to prove to me and we are just having a discussion and nothing I'm saying is meant to be a personal attacks. I may have been a bit dramatic and I've made a few jokes, but as I said, you seem like a good dude and I appreciate the discussion. That said, I wouldn't have guessed you studied business in college.

Painting an over-generalized, carte blanche picture of how EVERYONE across EVERY industry (regardless of size or resources) should conduct business I think more represents a fundamental misunderstanding.

I think we agree on a lot of points. But I'm afraid I don't agree with your cum hoc ergo propter hoc outlook in regards to why the small amp manufacturer subgroup has so many failures.

I'm happy to agree to disagree, but I'll stand on my statements that I'm discussing general business principles that are applicable to any business in any industry.

If you want my honest opinion on it, it has more to do with the ease of entry inviting people in that shouldn't be there. It's easy to go buy a plexi kit, build it, and then become an "amp builder" and start a "business."

You could be right about that.

But a ripped off circuit and some money exchanging hands does not a business make.

Let's be honest here. Aren't they all ripped off circuits? Is there really anything so new and revolutionary under the sun in tube amps? I think not. It's all flavors of things that have been done with our own twists. I'm an electrical engineer - I've been inside lots of tube amps. They are all variations on previous themes...

No? Companies don't need revenue to stay in business? Wow, that's news to me!

You know that isn't what I'm saying. What I'm saying is that deposits are not revenue and you shouldn't need deposits to keep the lights on.

Like I said before, but you conveniently avoided, businesses go through phases of growth and development. Along the way, revenue streams and cash flow evolve.

No I didn't. I didn't discuss that at all, but you have to figure out ahead of time how you are going to fund all phases without asking your customers to fund any of it.

Money received from customers is not revenue? I can't fathom why.

Refer to rlord's post or crack one of you old business books. Deposits are not revenue.

I currently have almost $10k in parts inventory sitting behind me (at my cost, not retail). But my business is run a certain way and taking customer deposits plays into that in the way that it does. There is a big picture to be looked at.

Do you run your business seeing only as far as your nose? Or do you have a plan? Dumbing down business to "build a bunch of amps and then sell them--then repeat" is kind of silly to me. Just like "take money for amp, build it, and ship it" is silly to me. But that is based on my plans for my business, my goals, my ideas for growth and my approach to the industry.

I'm not here to give you the details of my business plan, nor have I, so saying that I've "dumbed down business" to something is erroneous. I have my own plan. what I described is part of it. You have a plan and in this free country can pursue it. Once again, I can have my own opinion of it.

We obviously look at the amp manufacturing industry differently. I'm playing a different game than most, because I'm not ripping off Marshall or Fender circuits, slapping my last name on top, and throwing them into the sea of others doing the same thing. That by itself puts me in a different subgroup of the industry in terms of target audience and how to deal with them, believe it or not. I'm sure you'll disagree with that, but it is what it is.

I'm unaware of anything truly new in the realm of tube amp design, but if you've invented something new, I commend you on that. Every amp design I've seen has been built on a variation of what has come before as tube amps are very simple circuits. I see a lot of Marshall/Fender cloners out there, but it seems to me there are a lot of people adding their own twist to something that has come before like I suspect you are, but hey, Once again, if you've invented something truly new, kudos.

So my customers ordered products (many of them custom, one-off builds) and got them when they were told they would, then raved about how happy they were--and it turns out it was bad business?

That sounds like excellent business to me. I never said you were running a bad business, especially since I've made it clear about how I feel about truly custom stuff.

Steve, with all due respect, false attributions about my business on your part don't make them fact.

I never said you were running a bad business, although I could see how you could miss the subtlety of my statements. I meant it is bad business practice to make your customers investors. That is not saying that you are running a bad business overall.

Once again, I enjoy reading your thoughts and appreciate your spirit of discussion. Also, I am talking about general business principles here and don't mean to attack you personally, regardless of whether we disagree with aspects of how you run your business. I feel that you have taken some of my statements very personally and I understand it, but I am only trying to illustrate my points in the context of things you've said. I've made some comments having a bit of fun at your expense in other posts. I hope you have a sense of humor about them, but if not, I apologize if you take offense...

Steve

 

[jcj]

I view the 1/2 upfront deposit as buying the parts needed to build an amp. In a sense you really are paying labor to build you an amp from the parts purchased with the deposit.

Can you imagin Honda requiring $10-15k upfront and waiting for them to acquire parts and waiting for the car to built before you take delivery? It's more like an interest free loan to Honda. Build on your own dime not mine

No Shawn. The up front deposit is paying for the builder's rent and food for himself and his family. I mean they gotta eat, right? Can't you understand that?

Oopsy... now I can't afford the parts for your amp... Better go take some more deposits for the second run!Steve

Dead nuts accurate.....and we all know how THAT story ends.

 

[Anonymous]

A lot of interesting points raised here and many have valid points.

Lets talk about deposits. There are many reasons for them, but lets talk about how they are used in big business and the way I uses them.

I use deposits to make sure the customer honors the deal/build agreement. Since all my amps are custom to a point, the deposit isn't for parts or funding the operation per say, but a way to protect myself if a customer breaks the agreement and doesn't want the amp after it was built. It is also motivation for the customer to also honor the agreement.

Take the aircraft industry. Unlike the car industry, aircraft are only made to order. Deposits are required upfront and non-refundable. This protects the manufacturer from having unsold inventory left over at the end of the year. If there is, they can be sold at a lower cost since the original deposit helps make up the difference. And these companies have been around for over 60+ years and are well established.

Just like deposits on rental homes, apartments, hotels, etc it to protect them from default.


So as others have said, deposits that are used to fund the operation per say, is a risky business model.

I 100% agree with deposits for truly custom work. How else can you make sure someone has got some skin in the game for something that you built as a one off for them? You have to protect yourself...

And I also understand long wait times for custom work as well. As long as that is made clear up front, and delivery is made in some reasonable time period around what has been promised, there should be no problems

Steve

 

[Mailman1971]

I dont know crap about running a business.....
but damn if this isnt good reading!

 

[rlord1974]

I don't understand why builders always bow to customer "special requests". If the customer was excited enough by the amps being pandered to want one, tell 'em they come as advertised - no custom options are available!

 

[Shawn Lutz]

A lot of interesting points raised here and many have valid points.

Lets talk about deposits. There are many reasons for them, but lets talk about how they are used in big business and the way I uses them.

I use deposits to make sure the customer honors the deal/build agreement. Since all my amps are custom to a point, the deposit isn't for parts or funding the operation per say, but a way to protect myself if a customer breaks the agreement and doesn't want the amp after it was built. It is also motivation for the customer to also honor the agreement.

Take the aircraft industry. Unlike the car industry, aircraft are only made to order. Deposits are required upfront and non-refundable. This protects the manufacturer from having unsold inventory left over at the end of the year. If there is, they can be sold at a lower cost since the original deposit helps make up the difference. And these companies have been around for over 60+ years and are well established.

Just like deposits on rental homes, apartments, hotels, etc it to protect them from default.


So as others have said, deposits that are used to fund the operation per say, is a risky business model.

Valid points but AA is not putting 50% up front on a Boeing 767

 

[LP Freak]

I'll be right back....I gotta grab another pack of smokes.

 

[Anonymous]

my opinion is, if they have time to give tips to certain people on forums, and work closely with others regarding their precious mods/builds....then they have time for the nobody like me.

if not, i wont do biz with them. plain and simple.
i wont pay someone ahead of time either. maybe a deposit, but not 1500$ bux.

i pm'd fortin one day with some questions, and he was back to me within the day.

it aint to fuckin hard to turn on the computer and answer some emails...or, if you can,t have your kid or wife or someone do it while you tell em what to type. or, a simple old fashioned phone call would do the trick too, ya know (that goes both ways). this shit IS OUT OF CONTROL. but, the demand dictates the market, which dictates the bs you deal with... so, there you have it.

i would do biz in a minute for the amps i currently desire...with boogie, rockstah, baron, DAR and fortin. ...that list is small though due to some shit experiences, bs/short nasty/condescending answers and even no answers.

 

[glpg80]

As an ex-business owner i side with steve. You first need to see demand of which you can meet, fill the demand on your own back, support it with a portfolio, business plan, investment plan opportunities once you have it running, and then an assessment of either how to handle growth or how you want to sell it off to someone else.

I did not handle or deal with deposits - products were sold as is ready to go on the table. You want it, there is the wireless transfer account number. Custom work? we're going to need to talk and answer some questions before anything dealing with money is involved.

I believe it is stupid to talk business plans or anything business related in front of customers. The only thing that should be spoken about is how bad or good a product or service is. That is what really matters most.

 

[rlord1974]

I'll be right back....I gotta grab another pack of smokes.