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Web Exclusive --
When Nasser Abo Abdo confronted a cash crunch, he discovered a new partner with money to lend.
Most startup business owners worry about whether their products and services will be embraced by potential customers. For Nasser Abo Abdo, the problem was reversed when his company's products caught on almost too quickly with 16- to 23-year-old auto enthusiasts, and he found himself unable to fill orders. But, thanks to the resources of an unexpected ally, the founder of Buena Park, Calif.-based Audiobahn not only found the cash he needed, but an invaluable new business partner, as well.
Abo Abdo, 34, founded his company in 1997 to sell high-end car audio products like woofers, tweeters and speakers--with a cosmetic touch. The next year, he started marketing his wares at car shows put on by retailers and industry associations on the weekends. "I got a van and started hitting all of these shows, giving away key chains and posters and showing off the products," he says.
Within a month the tactic started to produce orders--and Abo Abdo found himself scrambling to find the cash to fill them. Trouble was, he wanted to avoid approaching his original source of funding. The asset-based lender had given the company a $200,000 line of credit in 1998, but at what Abo Abdo calls "extremely high rates"--similar, he claims, to those that a loan shark would expect from its borrowers. Instead, he took a tip from a small-business broker who pointed him in the direction of New York-based Gerber Trade Finance, a niche market lender that provides inventory and working capital finance to small- and mid-sized businesses.
It was a fortuitous move. Abo Abdo met with Jeffrey Koslowsky, Gerber's executive VP, and walked away with a $300,000 line of credit. That transaction was partly due to the fact that the company, he says, was "profitable right out of the chute." But Abo Abdo's approach was another deciding factor. According to Koslowsky, Gerber's top concerns in lending involve the business owners themselves, their trustworthiness and willingness to put in the sweat equity required to run a business.
"Generally I find myself standing across the table from people who expect a lot from me, and who don't realize that this is a two-way relationship," says Koslowsky. "When we initially sat down with Nasser he said, 'How can we work together to build my business?' that just blew us away."
That first impression stuck, and Gerber has since upped Audiobahn's line of credit to $3.3 million. What's more, the Gerber relationship has developed into one that goes well beyond funding. As seen when one of Audiobahn's banks locked down its corporate account in error, leaving Abo Abdo with no access to his money. Says Koslowsky, "Without questioning it, we immediately wired $50,000 to him to solve the problem."
Recently, Abo Abdo decided to seek a better source of promotional products, which he was buying domestically. He consulted with Gerber about a cheaper way to get the products from overseas sources and was soon hooked up with Gerber Hong Kong, a trading company for promotional items--a deal that saved him about 60% of his original costs.
Gerber also plays a critical role in the company's operations side, in the importing of Audiobahn's products, all of which are manufactured overseas. Gerber's back office essentially acts as a traffic manager for Audiobahn, handling complicated shipping issues, establishing letters of credit and sifting through document flow from suppliers.
Thanks in large part to Gerber's assistance, Abo Abdo's 22-employee firm posted $17.2 million in sales last year--up from just $1.4 million in 1998--and is on target to do $27.5 million this year. Says Abo Abdo, "Gerber really steps up to the plate and helps in many different aspects of my business, from sourcing to consulting to advice."
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