Using a Line of Credit to Expand into Hundreds of Stores with Hiatus Cheesecake

By: 

Aion

Hiatus Cheesecake, a gourmet cheesecake company founded by Matthew Featherstone, has experienced significant growth from humble beginnings to becoming a well-known name in the food industry. This expansion was not without challenges, especially when it came to managing cash flow and funding the production needed to meet increasing demand. One key factor in their success has been the strategic use of financing which provided the necessary working capital to scale the business into hundreds of new retailers.

The Origins of Hiatus Cheesecake

Matthew’s journey with Hiatus Cheesecake began with a deep-rooted passion for cheesecake, inspired by a childhood experience. What started as a personal love for the dessert evolved into a business when Matthew began making cheesecakes for friends, family, and eventually local restaurants. The initial breakthrough came when a fine dining restaurant in National Harbor became his first customer, setting the stage for future growth.

However, the business faced a significant challenge in 2020 when the COVID-19 pandemic hit, leading to the closure of many restaurants. Rather than letting this setback hinder progress, Matthew pivoted his business model from supplying restaurants to focusing on retail. This strategic move led to Hiatus Cheesecake becoming a vendor for Whole Foods Market and securing sales in hospital cafes, including the University of Maryland Medical Centers in Baltimore.

Strategic Growth through Partnerships

Hiatus Cheesecake expanded into 30 grocery stores, participated in the Kroger Go Fresh and Local Business Accelerator, and secured crucial partnerships with major distributors. These partnerships were essential in scaling the business, allowing Hiatus Cheesecake to reach a broader audience and enter new markets.

The Financial Challenges of Expansion

As the company grew, so did its financial needs. Early on, Matthew had to take out loans and win pitch competitions to fund large orders, particularly when expanding into new retailers like Kroger. The initial success brought new challenges, especially in managing cash flow to keep up with increasing demand.

Matthew needed funding to continue growing the business. Aion Financial provided Hiatus Cheesecake with financing through their Grow Now Pay Later (GNLP) product, allowing the company to manage cash flow more effectively. This financing option enabled Matthew to fund inventory, meet purchase orders, and continue scaling the business without the immediate need for equity financing.

The Mechanics of Using a Line of Credit

Aion Financial GNLP product allowed Hiatus Cheesecake to borrow against purchase orders, providing the flexibility needed to manage net terms and keep operations running smoothly. Aion has since sunset their GNLP program in favor of their Revolving Line of Credit.

The Revolving Line of Credit (RLOC) offered by Aion provides businesses a line of credibe up to an approved amount based off of eligible Accounts Receivable (A/R).

Debt financing proved advantageous for Hiatus Cheesecake. Unlike equity financing, where investors take a stake in the company, debt financing allowed Matthew to retain control of his business while still accessing the capital needed for growth. The line of credit from Aion Financial was particularly beneficial as it directly supported the company’s cash flow needs, which were critical as they took on more and larger accounts.

Advice for Founders on Securing Funding

Matthew’s journey with Hiatus Cheesecake offers valuable lessons for other founders seeking to secure funding for their businesses. While investor funding can be crucial for large-scale growth, debt financing, grants, and pitch competitions can provide the necessary capital to manage day-to-day operations and support incremental expansion.

Founders should also focus on maintaining tight financial records and developing a clear growth plan. When applying for loans or investor funding, having accurate and up-to-date financial statements is essential. This level of preparedness not only improves the chances of securing funding but also helps in managing the business more effectively.

Finally, it’s important to understand that different types of financing serve different purposes. Investor dollars are often best used for growth-related expenses, such as expanding the team or investing in new equipment, while debt financing is ideal for managing cash flow and funding inventory. A balanced approach, utilizing multiple financing options, can help businesses grow sustainably.

“Aion Financial  offers flexible lines of credit ranging from $10,000 to $5,000,000 to fuel CPG brand growth who are ready to scale in Retail and D2B sales”.

Foodbevy Offer:

Sign up for a bank account for free and access credit lines from $10,000 to $5,000,000. As a special offer for the Foodbevy community, Aion is completely waiving their fee of $99/month to access credit lines.

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