I find the "secret sauce" of converting a customer a very interesting subject as well. For the most part nearly every WISP I have run had a monopoly. The ones that didnt had a niche of some kind. My first owner/operator venture was not good because it was in a highly competitive market and I could not overcome the "go with the big company" mentality. My customers said I gave great service but even they succumbed to price. Therefore, I sold that and went back to the monopoly world (read boondocks). Even here, I eventually expect competition to enter my market. It would be nice to know the "secret sauce" so I can be better prepared for that day.
-RickG On Sun, May 24, 2009 at 9:33 AM, Charles Wu <[email protected]> wrote: >>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: [email protected]<mailto:[email protected]> > [mailto:[email protected]] 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" <[email protected]><mailto:[email protected]> > > To: "WISPA General List" <[email protected]><mailto:[email protected]> > > 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: <[email protected]><mailto:[email protected]> > > To: "WISPA General List" <[email protected]><mailto:[email protected]> > > 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" <[email protected]><mailto:[email protected]> > > To: "WISPA General List" <[email protected]><mailto:[email protected]> > > 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! 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