Michael Zadeh has been passionate about shoes most of his life, a passion that drove him to study design after graduating from college and eventually led him to found ZadehKicks in 2010. ZadehKicks is an independent reseller of designer athletic footwear that prides itself on offering quality, 100% authentic product, at competitive pricing with outstanding customer service. Michael primarily runs his business on eBay and started off selling two or three pairs at a time, with $180,000 in sales his first year. ZadehKicks has seen tremendous growth and sales are now topping $1 million a year.
“Slowly, organically, I grew from working out of my garage to now having my own warehouse. About four years ago I took it full time and now it’s all I do.”
Michael started ZadehKicks with $30,000 of his own money. When he realized that the only thing holding his business back was his ability to buy enough inventory to meet demand, he started looking into loans to give him more buying power. But as a small eCommerce business he still had trouble finding financing through traditional banks because of his lack of previous loans despite being profitable and having no debt.
“Just over two years ago, ZadehKicks was growing fast and gained access to a lot more product, but our biggest hindrance was capital.”
Michael started looking at alternative lending options and at first used a Merchant Cash Advance (MCA) company that gave him a $10,000 advance to help him purchase more inventory. However, the cash came at a steep price. Through daily debit payments repaid over two months, the effective annual interest rate (APR) on his first advance was 60%! For a while Michael continued to use these quick turnaround cash advances but soon found they were not the best solution for his growing business or his daily cash flow.
“I went with MCAs for about a year because it was the only option I came across. But the daily payments started the very next day, so they were taking my money before I could get anything done with it. It helped my business grow my purchasing power a little bit and helped my suppliers take me more seriously. But they hurt my margins because I was paying large amounts of interest. Their business model didn’t allow them to offer me what I needed, longer terms, lines of credit and bigger amounts.”
Things changed for the better for ZadehKicks when Michael was referred to Dealstruck and the rest is footwear history. Dealstruck worked with Michael to determine the best financial product for his rapidly expanding business and was able to offer terms that were much friendlier to his business’ bottom line.
Michael wanted to consolidate his high interest rate daily payments with a more traditional loan and needed access to much more capital than the MCA lenders were able to provide. Michael initially came to Dealstruck to get a term loan and received one to consolidate his outstanding MCA obligations. His account team was able to determine that in addition, a more flexible Inventory Credit Line was the best choice for his purchasing needs, allowing Michael to draw against it as needed and to choose to pay it down or draw more on it if a purchasing opportunity arises that will help him expand.
“I figured there’s got to be something out there besides MCAs and banks… What influenced me to make the change [to Dealstruck] was the line of credit that gives me access to more capital to keep growing. From a financial standpoint, it has been good for my business. It has allowed me to buy more product and grow more quickly than when I was using the MCA.”
Michael has been able to grow ZadehKicks faster than before with reasonable repayment terms and the flexibility to access capital as he needs it. Dealstruck is proud to partner with another motivated small business owner to grow his difference, one pair of shoes at a time.
“I believe that Dealstruck offers something that no one else does and I recommend the line of credit to other business owners like myself.”