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I don’t think I am alone when I say that I had an abundance of Ikea furniture as a student. It was cheap, cheerful and… cheap! If your student life was anything like mine, parties would result in people climbing and dancing on the furniture, food fights, play fights, emotional Nintendo Wii sessions and even taking the furniture out into the garden! We very much viewed our furniture as a short term investment, knowing that at the end of our three years living together (4 guys) that it would be ready for the bin. While the furniture survived the full three years, it was absolutely abused throughout its life. Thank goodness for cheap Ikea furniture!
This got me thinking of how Ikea and other companies work on an international basis and how they manage to stock such massive warehouses and stores. Essentially, my question to myself was where does the working capital come from? After some research, I realised that international trade finance would have been involved. In simplest terms, this is a bank loan – a means for companies to fulfill orders or in some way deliver the final product. A way to boost working capital.
In the UK we have a program called Dragon’s Den (I think this has actually gone international now) where potential entrepreneurs pitch their product to potential expert investors. Quite often some entrepreneurs have a fantastic product and a great business going but lack the capital to fulfill the big supermarket/store demands. I always cringe a little bit when they surrender massive stakes in their companies (up to 50%) in order to get a ‘dragon’ investor on board when the main reason is to provide the capital!! This is such a poor decision when there are various corporate banking services available to utilise. I appreciate that not everyone will be approved for such credit, but there are often cases in which businesses with a solid trading history just ‘give away’ equity for a loan! CRAZY
Secretly, I always wanted to go on Dragons Den. I absolutely love the idea of pitching to a dragon, negotiating and winning them over! In fact even more I would love to be a Dragon one day!! 😀
If you could pitch one idea in front of a Dragon, what would it be and what would you ask for?