How Vertical Line Grew To A $30 Million/Year Business Using Financing Techniques
Scaling a small business is, by its very nature, a challenging endeavor. And achieving entrepreneurial success under any circumstances is a great accomplishment.
But some business owners have more obstacles than the average entrepreneur to overcome.
The Early Beginnings
Adaickappan and his younger brother, Alagu would make of a great story to tell. Originally from India, Adaickappan first came to Singapore in 1998 as a mechanical engineer. Four years later, Alagu joined him in Singapore and both brothers had decent jobs.
In 2006, together they decided to strike out on their own and set up Vertical Line Pte Ltd, a travel ticketing e-commerce platform. With a good first-mover advantage leveraging on digital, along with sheer hardwork, the business quickly grew.
In a few years, they bagged multiple awards from travel airlines as one of their top sales agents from Singapore.
Challenges To Scale A Low-Margin Business
But scaling a business from small to large isn’t a tale of rosy pictures. In fact, any one who is familiar with the travel business industry would know that running a travel business is extremely risk because of the low final profit margin.
One of the biggest obstacles was thrown to the two brothers when they had to fork out a large sum of cash for inventory. Notwithstanding that, Adaickappan and Alagu were also expanding the retail outlets of the business.
All these activities required a large pool of capital. At the beginning, the banks offered them more than half a million worth of loans. While interest rates were high, the brothers felt that there were no other options left.
The next whammy came when Alagu was asked to serve the Army in Singapore for a month in order to convert his permanent residency status to citizenship.
It was a difficult time for the business. Being the head honcho of Vertical Line, the absence of Alagu meant that the company would tank. Not forgetting that costs of business was going up, and they were also paying through the nose for the high financing interest rates.
How He Turned The odds To His Favour
Alagu was stuck in a challenging bottleneck. He had to find ways to resolve these problems swiftly. Costs of business were high, staff was under performing and most importantly, cash flow was becoming tight.
Thankfully then, while he was in the army, he met someone who introduced him to the world of business financing.
In a surprisingly short time, Alagu got himself educated, and did his homework on the different types of financing options for his business.
Alagu quickly realized that there were more suitable financing opportunities for his business. At first, he moved over to a boutique alternative financier, who funded him up to $200,000.
But that amount was not enough to support the ambitious goals of the two brothers.
In a matter of months, Vertical Line moved their financing over to SeedIn. Till date, the business have successfully expanded to 6 locations and have even bought 2 properties under the company.
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