Mattress Supplier Transforms Business with $500K A/R Facility for Air Force Contract

The Situation
A mattress manufacturer’s representative with over five years in the business has secured a $209k contract to supply mattresses to the Air Force, covering 15 locations. The cost of goods is $130k, and she is responsible for recycling the old mattresses. This is her first government contract, and she needs guidance. Previously, she supplied mattresses to Las Vegas casinos and resorts and recently started bidding on government contracts. Her YTD 2021 gross sales are $870k, with a gross profit of $75k (8.6%) and a net profit of $24k (2.8%). Most past sales were on a commission basis with Corsicana, but the USAF contract is a direct sale with a gross margin of 37.8%.
The Solution
Transforming from a 7% commission to a 38% gross profit highlights the power of government contracting and the impact of seizing opportunities. SouthStar Capital played a crucial role by providing a $500,000 A/R facility. This funding allowed this company to secure the mattresses and start operations without any cash flow constraints.
The Result
With SouthStar Capital’s support, this representative transitioned from a commissioned sales rep to a successful distributor, significantly improving her revenue model. She delivered the mattresses to the Air Force locations and completed the recycling process, establishing herself as a reliable government contractor. This story is a testament to the power of determination and seizing opportunities. This representative’s financial success and efficient scaling of operations underscore the transformative impact of government contracting.