>All I can say is if you are "holding back" on doing more installs because you >can't afford it, you need to find some financing and get installing. Once that >customer is installed with something else (DSL, >Cable, competitor), it's 10x >harder to get them to switch to you. You have to get the customers NOW.
Now that's a more interesting discussion What's the business plan for customer acquisition? Do you still keep building out into unserved areas (e.g., "first to market")? At this point, I would guess that most areas have competition - so then is the business model based upon arbitraging attrition and moves? e.g., the average American moves every 7 years - so that means 12% of the population is available "yearly" as a "new customer" So, say you have 5,000 customers in a market of 100,000 You'll churn 1% / month (50) - but there's a market of "new adds" of 1,000 customers every month due to just organic moving activity...so assuming 20% market share, market equilibrium would be 20,000 subscribers Not necessarily a bad thing =) That said, I'd be curious to talk about "secret sauce" methods to convert customers from the competition -Charles Charles Wu wrote: Hi Scott, Regarding debt...I've found that there's a "scale inflection point" in running a WISP (or any business for the matter) that needs to be reached -- the main purpose for taking on debt (because due to interest, you end up paying more in the longer term instead of buying cash), is to accelerate growth so one can progress beyond this point e.g., if you can organically fund 30 new installs a month with cash, if you take on debt, you could leverage yourself and now do 100 installs / month Now, from a business perspective -- in looking at the WISP As a stand-alone sustainable business -- it costs a minimum of about $30k / month to operate a small WISP -- now, I'll argue that that $30k/month in operations remains relatively constant and whether it's supporting 300, 800 or 1500 customers -- however, at 300 customers, the business is bleeding cash...at 800 customers the business is just about at a break-even, and at 1500 customers, the business is a cash machine -Charles -----Original Message----- From: wireless-boun...@wispa.org<mailto:wireless-boun...@wispa.org> [mailto:wireless-boun...@wispa.org] On Behalf Of Scott Reed Sent: Saturday, May 23, 2009 4:20 PM To: WISPA General List Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability So I will take option 4 from a previous post since Travis made the point. "Up to 60 months with $1 buyout is the same as a 5 year bank loan." I want to run debt free as soon a possible. That being the case I don't lease and have not leased to keep debt down. I do have a start-up loan that is being paid on a little slower than I would like, but we have paid off 1/2 of it in < 5 years and based on our payments, we are cash flow positive. Granted, my WISP is a lot smaller than many that post here and our growth rate is small, but some of that is managing growth to stay cash-flow positive. I have seen several companies die because they became cash rich, but still could not cover the debt. Travis Johnson wrote: The banks can sell a car with little effort. They already have relationships with dealers and auctions. And often, if the consumer's credit is questionable, the dealer will guarantee to take the car back if the loan defaults. Who is going to buy a $10,000 radio that has been repo'd? Even for $5k, I wouldn't touch it. I'd buy a new radio with warranty, that I know is good and hasn't been fried or broken. The banks will never loan on the equipment alone. There is no security there... but again, why do you need a bank loan for equipment when you can just lease it and get the same results? Up to 60 months with $1 buyout is the same as a 5 year bank loan. What's the difference? Travis Microserv Tom DeReggi wrote: Maybe when talking about CPE. But what about when one is talking about a $10,000 Part101 radio? Just like a car, all that the lender should need is to "hold the title" of the radio until paid off, and get a down payment of $2000 to cover the cost of tower climber/repo man, and a signed letter of authorization from lanlord stating the location of the tower gear is installed on and they acknowledge that the gear is not abandoned equipment. (So it does not automatically become property of landlord in 4 months, and teh landlord knows the equipment owner has first rights to the gear). Think about it... Wouldn't repo costs be reduced when the repo man knows exactly where to find the radio? A car can easilly be relocated and hard-to-find, when the owner skips town. Plus the home likely has an owner with a shot gun or a big dog, which the tower/MTU likely does not. The MTU building might even have a security guard to escort teh lender safely to the roof :-) Tom DeReggi RapidDSL & Wireless, Inc IntAirNet- Fixed Wireless Broadband ----- Original Message ----- From: "jp" <j...@saucer.midcoast.com><mailto:j...@saucer.midcoast.com> To: "WISPA General List" <wireless@wispa.org><mailto:wireless@wispa.org> Sent: Friday, May 22, 2009 11:13 AM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability In a worse case scenario, a car is probably considerably easier to repo than the antenna on my roof and radio in my attic. And the car would be worth a magnitude more money. The installed infrastructure is worthless if it costs a huge amount to get to it. On Thu, May 21, 2009 at 07:27:09PM -0400, Tom DeReggi wrote: I've never found a lender willing to lend against using the in-place used equipment as colladeral. It is the biggest double standard. I find it highly ironic that they'll use a car for colladeral that looses 50% of its value the day it leaves the lot, and has a rate of failure and risk of damage higher than just about any product on the market, and it has a huge cash burn (gas :-). but yet lendors won't put equivellent value on wireless gear, that holds its value, Ebay boasting easilly 50% after 3-4 years of use, even after fully depreciated. I'll never understand the lending market. Tom DeReggi RapidDSL & Wireless, Inc IntAirNet- Fixed Wireless Broadband ----- Original Message ----- From: <rea...@muddyfrogwater.us><mailto:rea...@muddyfrogwater.us> To: "WISPA General List" <wireless@wispa.org><mailto:wireless@wispa.org> Sent: Thursday, May 21, 2009 1:55 PM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability Answers in-line. ++++++++++++++++++++++++++++++++ <insert witty tagline here> ----- Original Message ----- From: "Charles Wu" <c...@cticonnect.com><mailto:c...@cticonnect.com> To: "WISPA General List" <wireless@wispa.org><mailto:wireless@wispa.org> Sent: Thursday, May 21, 2009 8:49 AM Subject: [WISPA] Quesiton on Funding / Financing / Capital Availability With all the hype being generated by the stimulus bill, we have been approached by a multitude of third party financial organizations that have a renewed interest in potentially financing rural broadband...now, specifically, for WISPs, in the past, equipment leasing has been a very popular option for financing, but in looking at our numbers over the past year, I've noticed a marked decline in the amount of leasing that we do - that said, I have the following questions for the listserv about financing Assuming that WISPs are still need to buy equipment... 1. Are you able to just purchase equipment out of cash-flow organically generated from operations Other than originally starting with our own personal seed money, that's what we've done. 2. Have you gone to more traditional forms of money (e.g., bank / SBA / RUS loans)? I could not qualify for any of them. 3. Are you doing more vendor leasing programs (e.g., Motorola 3% financing deal) Never sought any. 4. Have you not been able to borrow money due to the credit crunch (e.g., not deploying as aggressively) My corporation hasn't ever been able to obtain hard money credit. In fact, the "credit crunch" start last Fall raised my "30+ day past due" amount from a piddly $1200 to at one time to almost $13,000 in just four months. That almost put us under, and we're still barely scraping by until our seasonally variable cash flow revives come August, with still several thousand on the books that's very slowly getting chipped away at. 5. Are you holding off on deployments because of the economy No, we're holding off due to lack of cash flow. We have plenty of people waiting for us to build infrastructure out to them. 6. Have you gone to Agility...<cough> Louie the loanshark =) After much discussion, being some of the first people Agility contacted, we have not done any business with them. In my estimation, they wanted control over our business and day to day decisions, which we concluded was both unwarranted and unwise. Or any other thoughts / comments on this topic? WISP equipment is not really a "commodity" in that there is almost no market for it outside of the "maker-vendor" relationship. Other than Ebay, and a couple of people who attempt to do it piecemeal, there is no "market" which stabilizes the value of used equipment, making them a commodity you can borrow against. Perhaps it would be more useful, if vendors had the ability to get capital and create stable working and short term credit relationships with their buyers, kind of like the used car market. -Charles -------------------------------------------------------------------------------- WISPA Wants You! Join today! http://signup.wispa.org/ -------------------------------------------------------------------------------- WISPA Wireless List: wireless@wispa.org<mailto:wireless@wispa.org> Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/ -------------------------------------------------------------------------------- WISPA Wants You! 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