Driving Growth in HealthTech: Miracle Mobility's Strategy for Success

Speaker A: Have you ever wondered if independence in mobility could be both practical and effortlessly accessible? Discover how Miracle Mobility's innovative solutions are reshaping personal mobility for those who cherish autonomy and ease in their daily lives in this enlightening episode. Welcome to Health Tech Growth, the weekly podcast for healthcare founders and innovators, where we explore essential strategies to create successful and sustainable healthcare startups that improve patient outcomes and transform the healthcare industry.

Speaker B: I'm Nola Heal, dedicated to helping business owners, uh, transcend challenges, embrace opportunities, and create sustainable growth and profit. Using a combination of financial leadership and strategy, I ensure that strong financial management and risk practices support stable growth and amplify it. Today, we touch on, um, Daniel Guthrie's innovative journey with Miracle Mobility, focusing on foldable wheelchairs. Let's listen to Daniel discuss overcoming niche market challenges.

Speaker C: My name is Dan Guthrie. I'm with Miracle Mobility. Um, I'm the CEO and founder of the company. Miracle Mobility is an E commerce company that specializes in foldable electric wheelchairs. Our wheelchairs fold to the size of a suitcase. They're lightweight and they can transport into the back of a trunk of a car. That's our strategic competitive advantage. And, uh, most traditional mobility aids that you've seen, uh, weigh a couple hundred pounds. They require the car adapters to fit on the back of a car. They fold to the sides of a large suitcase and you fit them in the trunk of your car. My consumer is traditionally an older consumer, typically in their 70s and 80s, uh, that have challenges with mobility. Our clientele is not necessarily tech savvy. It's mostly my, my parents age, uh, and for them to struggle to, to even use a phone, I have to use more traditional approaches to reach, uh, audiences. Paper advertising, uh, direct mail advertising, things like this versus the traditional social advertising. I've done Facebook, TikTok, Instagram ads, and they don't generate the ROI that I need them to continue them. Consumers really don't understand the product. You really have to be able to communicate directly with the consumer for them to understand the quality that you get. Yeah, you can get a really lightweight one and a really inexpensive one, but it won't last long. It's a cheap Chinese motor and it's got plastic casings versus metal casings. It's just not designed to last that long on. And so, you know, we're competing against that. It's an expensive product. It's anywhere between 1500 and 2500 dollars. And so you're not, it's, it's not something that people make a quick Decision on, they have to think about it for a while. We just have one local store where consumers will come in and we'll help educate them. And usually when they come in, we're pretty successful at being able to close them. But online, you know, there's a lot of, well, how far does it go? How much does it weigh? What's the seat size? Ah, you know, all those kinds of things. And it gets m confusion, consumer confusion. When you have 50 different options to choose from with 50 different specs, there's a lot of variables to consider. So I used to have, uh, three warehouses. I had one in Los Angeles, I had one in Savannah, Georgia, and I have one here in Florida. And you know, one of the things that ebay wanted or Amazon wanted is quick shipments, you know, but it's pretty expensive. I've had to consolidate warehouses and from three warehouses moving to one. So the transit times are going to be a little bit longer, but I save quite a bit from an operations standpoint.

Speaker B: Daniel comments that his biggest business challenge is working capital financing the large inventory he must carry. He has to invest a significant amount of cash buying inventory up to four months before he gets his cash from his sales, with that being a couple of thousand dollars per unit, several different wheelchair models, and a large number of individual units in the warehouse ready for delivery. He has a lot of cash tied up, a large carrying cost. Of course, many forget that having inventory sitting there costs a lot in interest on the cash warehouse, costs employees to manage it, et cetera. And Daniel has opportunity cost because he cannot spend the same dollar on something else. Miracle mobility operates primarily in e commerce, with most revenue coming from their relationship with big box retailers and the home shopping channel, which David says he is growing. So his ability to manage the return of his cash from the sales is also limited by the terms those channels impose. His industry and his own sales are exploding. So he wants to be able to take advantage. But to do this, he may need to increase his inventory. Working capital turn is very often the biggest challenge for a business. Cash is king because managed well, it springs the business further ahead, allows it to do so much more. But when cash is a challenge, it quite literally can choke the business. Restricts progress, makes growth or expansion impossible, and it's frustrating in the worst case, lack of cash will put you out of business. For a good supplier, the challenges include minimizing the volume of cash tied up, minimizing the period that that cash takes to come back, minimizing the number of dollars tied up to create each dollar of cash received. In other words, good sales prices bring in more cash than the inventory cost. And getting new cash into the business at a manageable cost when needed. The secret in inventory management is to match the credit the business gets from its vendors more closely with the time it takes to get cash back from the product sold. Easier said than done, I, um, might say. Very few have the luxury of delaying supplier payments until after they sell their products. But when cash management is done well better than the competition, it is a competitive advantage. Some of the options Daniel will consider are, uh, inventory optimization and forecasting, warehouse optimization, supplier financing, inventory financing, sales and cash flow acceleration, and new cash into the business. So looking at the inventory optimization and forecasting, Using inventory management software, it can be possible to forecast demand, um, for each model of wheelchair. Daniel probably can use his experience with the software tools to predict how many of each unit will sell each week or month, through each channel and out of each warehouse. This helps to then better plan stocking and restocking with minimum quantities just in time make the sales. It also allows for optimizing warehouses. By consolidating inventory into as few locations as possible, it's possible to minimize or reduce the inventory costs. Daniel already has done some of this by, um, moving down from three to one warehouse. He determined that on balance, the longer shipping time and perhaps shipping cost was less than having so much inventory spread across the locations. Perhaps also the wrong unit in the wrong place at the time it was required for a sale. This can reduce the total holding cost of storing those mobility devices for 90 days until soldiers. Consider optimizing inventory levels to ensure individual SKUs are not overstocked on slower moving models and minimize the risk of stock outs for high demand ones. Take advantage of supplier financing as essential. Negotiate favorable payment terms with suppliers to extend payment deadlines, Allowing the company to hold onto its cash for as long as possible before paying for that inventory. Get as close to the sale date as possible. Every extra week is valuable. Over time, as the relationship progresses, it is often possible to negotiate progressively even more favorable terms with your vendors. Things like bigger discounts for higher purchase volumes or higher frequency even after the fact rebates for purchases over the previous year, better purchase prices and payment terms. If Daniel guarantees that he will purchase a certain volume from the supplier, it can pay off fast. And some suppliers may even be willing to assist with consignment stock so that it is only paid for when Miracle Mobility sells their their product. Many suppliers offer financing options where the supplier provides financing to cover the cost of the inventory. This can help alleviate the cash flow pressure because it delays when the cash needs to be paid. But it also takes advantage of the buying power or credit rating of the supplier to make finance available to smaller companies at a way better borrowing cost than they could negotiate themselves. Turning to inventory financing as an option to assist a company bridge the time between paying for their inventory and getting the cash in from the sales, lenders offer secure inventory specific financing or line of credit that is specifically secured on and finances that the inventory purchases. This type of finance allows the company to borrow against the value of its inventory to cover the cost of purchasing new inventory. It provides cash while waiting for sales to generate cash. It can be especially valuable in the early stages of a significant sales volume expansion. Some companies will also be able to to accelerate their sales and cash flow by offering discounts for early payment. Customers can be incentivized to pay invoices more quickly, thereby getting cash in faster. Implementing different sales strategies may also increase uh the rate of inventory turnover, uh reducing the amount of time inventory sits in the warehouse before being sold. And of course, as the business grows, there will come a time when new cash must be sought to fund the accompanying higher working capital requirements. The owner may decide to look for equity or debt or perhaps a combination. This can be a very complex area. There are many options and hence it is advisable to consult with experts who specialise in this area. By UH implementing strategies like these, a company can better manage its cash flow more closely. Match outflows for inventory to the cash inflow from the sales, ultimately improving its overall financial health and competitiveness in the market.

Speaker C: Thank you for listening to Health Tech Growth. If you're a healthcare tech innovator or founder interested in being a featured guest on our show, visit HealthTechGrowth IO to learn more.