What kind of information did the bank focus on to become comfortable with Maverik?
Our projections — where we are going to be [in terms of sales] next year. We didn’t just put numbers on paper and rely on wishful thinking. We were hitting the numbers, exceeding them every year. We formed a good partnership, in which they came through and ended up financing us the way we needed to be financed to grow. We basically showed the bank that they would hinder our growth if we were underfinanced.
And you got the required financing?
They came through with the financing, and we were able to produce the product and get it on the shelves at the right time.
When you talk about the “right time” are you referring to supply-chain timing?
Yes. Because lacrosse gear is seasonal, if you don’t have your merchandise on the shelves by a certain time you lose sales. If you’re a month late, the retailers will cancel the order. Timing is everything, and if you don’t have the money to pay for the merchandise, the vendors are not going to ship it from, say, China. Now we’re at the point where the vendors are starting to give us credit, so it’s making it a little bit easier for us. But the most difficult thing about being new was that the overseas factories did not give us the credit we needed. So you’re putting down deposits, you’re paying for your product up front. As a result, we’re trying to hit sales numbers and pay for the products out of our pocket before we even put it on the shelves. And it’s a battle.
Has the credit crunch affected your banking relationship, or any other aspects of your company?
The bank that we’re working with has been very comfortable with us. Our banking relationship is not one of our bigger problems anymore. The problem that we’re worried about is getting paid for our product — whether we have the receivables. The credit crisis affects our financing from the customer side because our receivables are our financing. The way I look at it, you’ve got to count on getting that money from your customers, or your cash flow is shot.
Have you ever considered selling your receivables to raise capital?
We looked into it. It was just too expensive. Going to the banks for a credit line was much cheaper. And we started accepting credit cards [from customers] for large amounts. We’d rather just get the money in the house and not worry about it. Going the credit card route has helped to make sure our cash flow is steady.
Regarding measuring your growth, what metric do you watch?
I think you always have to look at revenues. You always look at your margins, too. Margins on your products are pretty important, because you don’t want to grow your sales by giving product away. So I would say we look at sales and gross profit margins, when we track growth, as well as the different products categories to make sure each category is growing.