The lifeline for the transformation of traditional industries is not the Internet, but finance!

[[157015]]

Under the policy of "mass entrepreneurship and innovation", batches of entrepreneurs have worked hard for their dreams. However, according to unofficial statistics, the success rate of start-ups is less than 5%. Batches of traditional industries have been constantly innovating for transformation, but have forced themselves into a dead end. This year, many companies have had a hard time! What I feel most deeply is that the stores on the two streets change people every few months, and even the recharged membership cards are invalidated as the stores close down. Traditional industries are desperately looking for a path to transformation. The management is eager to understand new concepts such as "Internet +" and "equity incentive structure" in one day, but they don't know how to integrate these new concepts into their own companies. As a result, they fail to achieve their goals and the companies are going downhill day by day.

The lifeline for traditional industry transformation is not the Internet, but finance

Many traditional industries have seized on the "Internet" as a lifeline during their transformation. Can the Internet really save your business? I have always believed that the Internet is just a communication channel.

Ten years ago, CCTV advertising was a brand communication channel. Once it was on CCTV, it became a well-known brand in the hearts of the people. Paper media is also a communication channel. After running a short advertisement, some people will think and ponder. Today, the Internet plays a similar role, but the Internet platform is more open, with a larger audience, faster information update, and a larger amount of information. However, as a communication channel, the Internet can hardly help traditional industries successfully transform. It is undeniable that many companies based on the Internet have successfully gained audiences and even successfully listed. Such companies themselves are business models designed from the perspective of the Internet, while most of the problems of traditional industries are how to solve the capital chain, upstream and downstream pressures, inventory costs, etc. The Internet can provide traditional companies with an external window, but it cannot upgrade traditional companies from the essence of the business model.

However, by grafting appropriate financial models based on the characteristics of traditional industries, it is possible to realize inventory, increase the value of deposited funds, and even change the upstream and downstream relationships of the industrial chain, so that stakeholders can benefit together. No enterprise can do without funds, and the difficulties faced by enterprises are most likely caused by capital problems. In particular, some traditional enterprises have a large amount of assets, but lack cash flow and start-up funds for new projects.

For example, many coal mining companies have obtained the mining rights of a certain coal field, but they have been unable to start construction due to lack of funds to purchase mining equipment. Coal mining companies can apply for loans from large steel mills downstream, and the two parties sign a trade compensation agreement. The coal mining companies promise to use coal to repay debts at the agreed coal price after mining. Coal mining companies first use the steel mill’s loan to purchase mining equipment, deploy personnel, and carry out mining work. This model closely links the two stakeholders, coal mining companies and steel mills. One party is in urgent need of funds, and the other party needs low-priced products. The "buyer's credit, trade compensation" industrial chain financial model benefits both parties and achieves a win-win situation!

Traditional industries are on the decline. They are burdened with a large amount of heavy assets that cannot be converted into cash. How can they turn assets into capital, how can they exchange space for time, and how can they get out of the current predicament?

The author explains the important role of finance in industrial transformation from the perspectives of three relatively representative traditional industries: liquor, beauty salons, and catering.

Model 1: The alcoholic beverage model sells a financial management tool

The wine industry has never been interrupted from generation to generation, from ancient times to the present. Basically every region has its own unique winery. This fast-moving consumer product is everywhere in our lives. The wine industry can be regarded as a representative of traditional industries. From the earliest wine workshops to today's large and small wineries, large and small distributors and agents, they are facing inventory pressure, payment pressure, and capital chain pressure in the fierce market competition. How to solve it?

Last year, an unknown winery in Guizhou achieved sales of 220 million yuan in one month, and the money was received immediately after the sale. How did it do this? The winery cooperated with the Guiyang Commodity Exchange and sold 1 million bottles of wine at a price of 220 yuan per bottle through the Guiyang Commodity Exchange Liquor Trading Center, with a minimum purchase of 240 bottles, that is, 50,000 yuan. Customers who buy the wine do not have to take it back immediately. Customers can also change different grades of wine in the winery as needed, and even store the wine in the winery for three years. After three years, the winery will repurchase it at a premium of 24% of the issue price, with an average annual yield of 8%. According to general financial products in the market, an annualized yield of 8% is already a good return.

The essence of the business model is the transaction structure of stakeholders, and this model allows all stakeholders to obtain excess benefits. In the entire structure, the winery obtains cash flow and production cycle. The cash flow is that the cash flow is obtained from a single sale. The wine industry has high profits. Even if some customers really ask the winery to buy it back after three years, they only need to provide 8% "interest" a year. The winery can find a suitable investment direction to increase the value of part of the cash flow. In addition, the wine does not have to be taken away at once, but can be taken away in batches as needed, which also reduces the production pressure of the winery. In essence, it is a fixed-income financial management method sold to customers. For customers, when buying this batch of wine, there is a need for wine. Even if they cannot finish drinking it in the future, the remaining part "has principal and interest", which is also a way to maximize benefits. For distributors, there is no need to stock. As long as they find customers who need wine, they can submit applications to the winery. This will not only reduce funds but also reduce inventory pressure.

This quasi-financial model can be used in many traditional industries such as wine, tea, etc., especially black tea, which has collection value. It can be combined with financial elements and designed into a stable investment product, so that every stakeholder in the entire transaction process can achieve a premium. There is no need to worry about traditional industries getting out of the industry!

Model 2: Beauty salon model, earning money from the capital chain

Beauty salons are very representative of traditional store businesses. Generally speaking, beauty salons have to invest a lot of money in decoration, store layout, and marketing in the early stage, and the profit model in the later stage is mainly based on the sale of membership cards. The current situation in the industry is that many beauty salons have a high flow of customers when they first open, but then the preferential policies are gradually reduced, and a large number of customers are lost. In addition, there is serious homogeneous competition in the industry, and customer stickiness is low. Without customer flow, the fixed costs and labor costs of beauty salons can overwhelm the entire store. How to stick to customers?

The author came into contact with a very unique beauty salon. The owner of the beauty salon grafted a large number of investment products through the surrounding resources, making it a beauty salon club similar to an investment theme. Most of the people who go to the beauty salon to enjoy are middle-aged women aged 30 to 45. They not only have a certain consumption capacity, but also control the "financial power" of the family. They hope to increase their wealth. At first, the owner of the beauty salon recommended that customers recharge a certain membership fee, entrust the membership fee to the investment company for financial management, and return most of the profits earned to the customers. Customers not only enjoy the beauty projects, but also get the returned profits, killing two birds with one stone. Later, customers became more and more familiar with the beauty salon's stable investment methods, and the hostess took out her own assets for investment. It is understood that the investment share obtained by this beauty salon each year is three to five times the net income of other beauty salons. At present, many customers have invested in this beauty salon. They have successfully merged two local beauty salons with depressed business, copied its current model, and are doing well.

This model can be implemented in beauty salons, fitness clubs, coffee shops and other member-centered industries. Such industries have a certain amount of capital accumulation and a relatively loyal group. It is easy to create an investment concept in such a community that is accepted and recognized. The risk of this model is that once the investment fails, it will cause customer loss, so the selection and inspection of investment products must be extremely cautious. However, as the scale of the enterprise expands, these customer groups will gradually form a larger investment group and can participate in more investment channels.

Model 3: Catering supply chain model, reducing upstream and downstream pressure

There are many operating models in the catering industry. Throughout history, food is the primary need of the people. No matter how it changes, the catering industry will eventually present delicious dishes to customers, and dishes are inseparable from ingredients. Ingredient procurement is one of the largest cost expenditures in the traditional catering industry. Many catering companies will default on procurement accounts for 1 to 3 months, especially direct-operated chain restaurants without direct supply. The ingredient suppliers themselves also have financial pressure. The purchase costs for overdue accounts are increased by about 5% per month, or even higher, and the costs of catering companies are naturally increased. Based on this situation, a catering financial supply platform cleverly intervened, integrating the popular concept of "crowdfunding" to release the pressure of suppliers and catering companies at the same time.

It is reported that the financial supply platform regards the procurement of food ingredients for chain restaurants as an investment target and is open to the general public of investors. If the investor's funds are insufficient to purchase food ingredients, the platform will make up the corresponding funds and pay the funds to the food ingredient supplier first. After the agreed time, the catering enterprise returns the procurement fee, and the investor receives a certain percentage of the investment return. This model is similar to the currently popular P2P, but the financial supply platform is combined with the catering industry, and most of them are relatively mature catering enterprises with stable profits, low risks, and strong traceability.

According to incomplete statistics, of the 3 trillion operating income of the entire catering industry, nearly 1 trillion is used for food procurement. It can be seen that the cost of food procurement accounts for such a high proportion of the cost of catering companies, and many companies are struggling on the cost line. At present, there are at least 2.5 million catering companies, 4.2 million catering stores, and 11 million food distributors in China, and more than half of these companies are facing such problems. The catering financial supply platform integrates catering companies, suppliers, and investors, so that the three stakeholders can fully benefit, and also reduces the pressure on the upstream and downstream of the industrial chain, helping the transformation of the traditional catering industry.

"Mass entrepreneurship and innovation" is a long and arduous journey. The transformation of traditional industries cannot be achieved in a day or two. Historical problems and internal management issues in the industry may be stumbling blocks to transformation, but the key is how to design and handle the transaction structure of stakeholders. Combining the window of the Internet and integrating effective financial models, stakeholders can be closely locked together and benefit together. This is a benign transformation, and only such enterprises can go further!