Ecommerce Funding Made Simple | #244 Oz Merchant

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Claus Lauter: Hello, and welcome to another episode of the e commerce coffee break podcast. Today, we want to dive deep into the financial side of running an e commerce business. So there's a lot of different topics that we want to touch on. We want to talk about cashflow, funding, financing, banking, forecasting, everything that a merchant has to deal with when it comes to the finances of a business.

And with me on the show, I have Oz Merchant. He is the VP of customer success and support at runviably.com, a financial solution for e commerce business owners with over 20 years of work experience is a seasoned leader, entrepreneur, and coach in the field of sales, customer success, and e commerce, and he's passionate about helping business grow online and thrive, so.

Let's dive right into it and welcome us to the show. Hi, how are you today?

Jordan Watts: Good class. Thanks so much for having me on.

Claus Lauter: You're welcome. businesses and finances are always not the easiest topic. Specifically if you're in e commerce and you're talking to your normal bank around the corner, they probably will not understand what you do as a business. There's a lot of explanation to do from your perspective.

What are the biggest challenges you see that e commerce businesses? D2C, B2B, whatever they're in, are dealing with when they're talking to banks.

Jordan Watts: My act one of my life was in the retail wholesale manufacturing space, and then I got really into the tech world and the SAS company specifically. And one of the challenges we ran into as a SAS company was just that. Most traditional banks just don't understand how that business works.

KPIs, the metrics, how to underwrite that business like that. They're looking for property, they're looking for physical assets, something to use as collateral. And when it comes to something that's in the cloud, they're like, how do I underwrite this? How do I support a business like this.

So we ran into those challenges in the early days of SaaS. And when we were launching Viably, we started focusing on a small business, but then quickly realized the bigger need is around e commerce because they face the same challenges we did going to a bank and they're saying, well, you've got inventory.

But that's it. You don't really have any other infrastructure that we can use as collateral to underwrite the business. So understanding those pain points that, anybody that's dealing with the cloud has to deal with. We said, okay, this makes a lot of sense. We know we understand that business.

We know how to go underwrite a business like that. And we know how to service a internet based business e commerce business, so there was just a lot of, affinity and alignment with , supporting that type of business model.

So when we started talking to sellers, we understand, how they're buying one point in time. They're going to be selling in the future. They need funding right now. So it's just like a, SAS business, you need money right now so that you can keep scaling, hitting the next milestone.

And the same thing with e commerce. It's like you were wanting to keep growing the business so that you could hit the next threshold, buy more inventory, improve your buying power, with your suppliers. So that model just makes sense to us to partner and align with the e commerce space.

Claus Lauter: You were touching on probably one of the most important KPIs for most businesses, cash flow. Can you dive a little bit deeper into what actually cash flow means and, how this number, relates to, for instance, talking to banks?

Jordan Watts: Yeah. When cash is the lifeblood of any business. And when it comes to something as capital intensive as e commerce, where you're really having to outlay a lot of capital and you're not going to see fruits of that labor until 30, 60, 90 days out. It's all about doing the math to figure out, okay, do I have enough capital to go buy the inventory they want to go buy?

Do I have enough capital to pay the VA's, the payroll, anybody that's working the warehouse for me the marketing teams, the agencies, the consultants, everybody that's helping support that business. Do I have enough cash to cover all of that? As well as all the ad dollars to make sure that. Business is viable. The product is profitable. And making sure that it can, the whole machine can keep running and growing in the right direction. , because our platform is a technology platform, we're bringing all that data in. We're looking at that from an underwriting standpoint, but we're actually sharing that back with customers.

We actually built out the platform so that you can actually see your own cashflow, all the money flowing into the account whether it's from checking accounts, whether it's from your credit cards. So you can see a full visibility of all money going in, all money going out. So you have a better sense of.

 What is possible if I were to go launch a new product, what's the impact to my cashflow? Can I actually go do it? You can actually go build that kind of a simulation and say, okay, if I were to go do this next product next two months, based on how much it's going to cost me, how much marketing I'm going to put to make that successful and how many sales that I'm going to project.

Is it. Feasible for me to do that. And if so, great, maybe that strategy works or maybe it's okay. That means that I can go execute it. It's still a sound strategy. I just need additional capital to realize how to make that happen. So you'll have the data to make those type of decisions rather than guessing at it.

So that's where cashflow becomes really critical. It's just forecasting and planning ahead so that you can see the business, months down the road rather than just today.

Claus Lauter: I totally agree. The data makes definitely the difference there. Now for new businesses, they probably don't have the data and specifically looking into e commerce and D2C. Thank There's obviously a bit of a Q4 for instance, like the biggest , part of the year. And then you have to have financing to finance the marketing going into Q4 to buy inventory and whatsoever.

How do you help the merchants? with the data to understand or to read out what they actually need in regards to cashflow or financing or funding.

Jordan Watts: Yeah. So if they're looking at, okay, and we're just, quite cam and I'm going into Q4, I need to basically buy a lot of inventory, but that's just not it. I need to do enough advertising unless you've got the products that you can spill over into January and it won't make a difference, meaning that it's not so seasonal, you can still get those sales.

Then you can potentially even overbuy and still be okay. Cause one of the other problems a lot of people run into is like, okay, I have a great season. But I under bought, meaning I could have potentially sold a lot more if I just had the inventory there. Especially if you've done putting all the marketing dollars and stuff behind it, so it's finding that fine balance of, okay, can I actually get all the inventory I want?

Can I do the ad spend to make sure that I can generate the sales projecting? So having once again, the data to say, okay, this is what I'm. Planning out, and then looking at it to say, okay, does the math make sense? Once you have that kind of visibly while in front of you to run it as a simulation to say, okay, if I were to do this, if the sales happen here as I predicted to happen, then it makes sense to go forward with that purchase.

Or maybe it makes sense to go forward this aggressive of an ad spend. because I can move that inventory much faster and I'd rather do that rather than having a sitting in a warehouse, or if it is seasonal items, then I don't want it to spill over into Q1.

Claus Lauter: So viability obviously is all in one financial management tool to help with that. So you're pulling data from different sources from which sources do you pull data together how often should, as a merchant, should I look into it and read out the results?

Jordan Watts: So you can pull in data from your Amazon, Shopify, eBay, Walmart, your bank accounts, your credit cards, pull in all that data. And it's real time, so it's all API connection. So it's happening every day. You can switch between, a weekly view, a monthly view, a quarterly view, however you want to slice the data and kind of analyze what's happening inside the business, what's flowing in, what's flowing out.

 The whole idea is we wanted to build something that's more holistic. People will, if they're on Shopify, they're looking at Shopify reports, if they're selling on Amazon as well, they're looking at those Amazon reports, but all the different channels gives you silent information.

The whole idea here was like, okay, let's look at something more holistic of the whole business without having to go into the fine details of something that QuickBooks or Xero may offer. Since we're looking at the data ourselves, we just want to share that back to say, okay, this is what we're seeing is the health of the business.

 What we're seeing is it aligned with what you're thinking and then let you manipulate some of that data.

Claus Lauter: you're not only providing a tool, a platform to read out the data, but you also go a step further and your help with funding and banking. Tell me a little bit more about that.

Jordan Watts: The whole idea is that, once we have the data, if you can say cause the whole platform is free and the banking is free. So zero fee banking, the cashflow management and kind of looking at the growth stuff, all that's free. Funding is really where we see if you're providing the value, you're seeing how to scale up your business then.

Most times you're going to be like, okay, well, for me to go execute a strategy, I need some funding. So if you take funding from viably, it's basically done very similarly, how a lot of kind of these types of businesses done where unlike a traditional bank, we're not doing personal guarantees. We're not, using anything for collateral.

We're just basically buying essentially your future receivable. So we're looking at the health of the business and the growth of it. So long as you've been in business for six months and do At least about 10, 000 or more on average per month, then you have an opportunity to basically take funding.

 And you want to take it the right time. It's capital is one of those things. I would say money amplifies whatever is going on. So if you're not doing the right types of things. All it's going to do is just over time, just expose that further. If you are doing the right kind of behaviors, it's going to help you , amplify.

Okay. Yeah. You're doing the right kind of metrics. It's the right time to use capital. Too early is probably not a good thing. Meaning the machine's not working quite right yet. Just because you have capital throw it into to Aspen, because that means you just didn't really optimize your ads.

You just. Use money to hide the fact you're not optimizing your ads. So you want to basically fine tune all those things and let the capital best utilize to fuel the fire of a well working machine, not, hide. areas you're not wanting to look at. Are you overpaying for inventory are you overpaying for shipping?

you overspending on ads? All that can be tucked away because you have enough capital. The whole idea is to use it the right way so that you can actually getting the most ROI of capital. Most people think about, what's my cost of capital? If you're using it the right way, you should really be thinking about what's the ROI on my capital.

If I put a 1 into this machine, does it crank out? One and a half, two, 5. What does it give you as a return of that? So if you can start thinking about it that way, it just changes how you start looking at capital.

Claus Lauter: I think that's very valuable advice. And the business should listen twice to this because, just getting money and pumping into a business that is not optimized to the maximum is really wasting money and not a good business decision to get there now. This is that, all of these things are coming together from YLB.

What's kind of the approval process or the process to get started with you guys? 

Jordan Watts: That's very simple. You go basically to runviably. com. That's the website. R U N B I A B L Y. You sign up, you connect, Shopify, your Amazon or Walmart, eBay, your bank accounts, your credit cards, all done through, APIs and stuff. So all you're doing is just. Signing in real quick. So it takes maybe all 5 minutes, and then that will basically generate an algorithm that will go through underwriting.

 And it's looking at the health of the business and looking at kind of future sales and growth, , because the whole idea is we want to, fund the business, the right amount of funding, meaning that, we never want to put you in the red. Whole idea is we don't want to put additional strain on the business.

We want to basically, capitalize you in the right way, for the right amount that you can settle back. So you're not going deeper in the hole. That is the key metric and then, there's final verification steps with the viable account. You're also getting the full business checking.

So you can have the banking capabilities, you can wire transfer out of it. You got cash back cards. So you get the full experience that way. And because of that, since it's a viable account, you also get the funds right into your account within 24 hours.

Claus Lauter: That's very straightforward. Very fast. Who's your perfect customer? Which kind of industries, niches, verticals do you work best with?

Jordan Watts: Long as the commerce really, it doesn't matter if you're selling through Shopify, if you're selling on Amazon, that's the primary focus doesn't matter. What kind of categories of products you're selling. There's working capital. That's good for people that are doing private label brands and such.

There's Cash advance we do for people that are doing more arbitrage stuff where they need access to capital much quicker so they can go do more shopping and buy more products. We offer that as well. So that may be on any of the marketplaces that where you can do more arbitrage stuff on, sometimes people ask, well, can you work with drop shippers?

Technically, yes. When you're selling Shopify or Amazon, just the capital needs are just different. You're making the sale before you're, needing the funds. once again, we go back to educating saying, okay, is it the right time for you use the capital and said the best use of that capital

Claus Lauter: What kind of requirements do you have from, is only for us based, merchants or international or how does that work?

Jordan Watts: at present us entities only. So long as you, the businesses registered in the U S LLC, Inc, whatever that is, however, you've said that as long as there's one in the U S. Yeah, that's the only kind of key requirement, over time we will plan to support full international entities as well, but right now it's just U.

1. based.

Claus Lauter: what's your pricing structure? How do you earn money?

Jordan Watts: from the funding aspect is the only way we're just doing it as a flat fee rather than, people ask us, what's the APR stuff. not lending. We're not doing loans and stuff. It's really just working capital. , we just do it as a flat fee. Usually ranges anywhere from five to 10%.

 And that's usually about three to six months. So you're getting capital, you're paying a fee and then you're settling that as a percentage of sales over time.

Claus Lauter: You mentioned, partly already what the question is now, is there any kind of homework that I need to do as a merchant before I get in contact with you? Mm

Jordan Watts: It's interesting who gets into space. We, seen some people that are very organized and they. We're, managing books and they're in the previous business, corporate careers and such, and they bring that same discipline.

 And there's other, we've seen that kind of started the side hustle. Every time I do hear a new business term, I Google it because this is not my background. I'm a scientist or I'm this or that, it's just like. Business is all new. They have got this idea.

solving a particular problem. They've created this product to serve a need. But the business aspects are all new to them. 

You haven't, take it on like tons of other funding. So you're not basically overextended. That's the 1 of the always the challenges. Okay. I've taken so much funding that I'm just trying to get myself out of the hole. more capital is not always the way to get that. Some business can pull it off.

If the sales, the product is just right. The time of the year is just right. That you can have the sales velocity to get you out of that. Otherwise you're just digging yourself deeper.

This is how much I'm looking for capital wise, because I can basically take this and I can buy this much inventory and I know I can sell it. And over this period of time, all of that helps we're talking to almost every person, every merchant that's kind of coming on the platform.

 Data as it's being consumed by the platform is one side of the story, as we learn about what the aspirations are, because we're really looking at it as a private banking experience. We want to partner with the merchants all the way till exit. We will start with them very early on and take them all the way till they're ready to sell the business.

And we'll even help them make introductions to MNA and folks that can help them do the proper exit planning all the way till that exit. we want to be part of that journey, because we know that if they're scaling, well, they're going to need, additional funding rounds through that journey.

 And the better we can help understand the business, and the more we can connect them with, everybody in our network, their success is our success. There's very much an alignment in helping them achieve that.

Claus Lauter: think it's a very important point that you mentioned there is, having the data, having a platform where all the data comes together as one point, but understanding the data and probably having someone telling you the results or the outcome or the decision making process with that data is even more important than just having the data.

Before we come to the end of the coffee break today, is there one final thoughts that you want to leave our listeners with?

Jordan Watts: , it's a very simple process to get started. Having access to capital and knowing where you stand is always good to say, okay, well, it's in your back pocket. You don't have to take funding from us. At least, this is what's available to me.

Then I can use that data to say, what do I do with the business? What else can I do with that? How else can I grow? Especially as you go into kind of Q4, it's like, okay, if I have this much more capital available to me, can I actually go get aggressive on this, ad spend? just having that information lets you make better business decisions.

I always recommend people say, just go get the information, go get connected, see at least you can get an offer. Even if you're not using the offer, you still got the cashflow management tool and you will get informationally richer by having all that information at your fingertips.

Claus Lauter: Yeah. Good advice there. Oswald, can people find out more about you guys?

Jordan Watts: Yeah. If you go to the website, runviably. com. R U N V I A B L Y. com. And you can find us on all pretty much the social channels and everything. So I think at runviably, whether it's LinkedIn, Instagram, Twitter, TikTok, we're on everything now.

Claus Lauter: I will put the links in the show notes as always, and you're just one click away. Thanks so much for giving us an overview. I think there's a ton of golden nuggets in there what do you need to look at when it comes to funding and financing business. And I hope a lot of people will check your website out.

Thanks so much for your time today.

Jordan Watts: Great. Thank you, Klaus.