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Hi John et al,

Here are some suggestions on moving forward on this venture:

- If the tires are good, like we hear on this thread, they will sell if the price is anywhere under the Michelins. Of course, the lower, the better, and you will 'probably' have more sales, but quality, performance, and durability are going to be your main selling features. I don't know where your price point sets right now, but I am guessing it is above the Kuhmo's If so, you just have to not worry about that price point; that is a different level of rally tire, and again, if the Michelin-like performance is there, you are not selling against the Kuhmo's. At $100 to $110 per tire, you have a winner price in my opinion, if the quality, performance, and durability is close to the Michelins.
- Any exchange rate difference has to eventually effect Michelin prices and Pirelli prices in the USA, unless the mark-up by those tire sellers was so high (while the $/Eu exchange rate was favorable) that the sellers can absorb the loss with the worsening exchnage rate. I doubt that this is the case, but they might be willing to absorb it for a while to competitively foil your start-up. If that is the case, then you have to make sure you do not lose $$ on the situation, so that you can hang in there while that plays itself out. It's theold watermelon sales joke: If you are losing $0.25 per watermelon, you ain't gonna make it up on volume by lowering the price to lose $0.50 per watermelon!
- If you need a volume commitment for a minimum order from the manufacturer before you can get the tires made, then you have a tougher situation. You have the quandary of wondering if you will ever sell off the initial inventory. The only thing I can think of is to take real orders for a while with actual money exchanging hands so you are secured from folks backing out. This would give you a some sort of market test, but it's certainly hard to do; you have to be totally clear up front on what you are doing and scrupulous on refunding $$ at a set time in the process, if things dont' move forward, to avoid the 'hoax' accusation.

Starting-up with rising and unknown cost-of-sales is the toughest and scariest new biz move you can make, so you have my support for whatever it is worth!

Regards,
Mark B.
 
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