The problem with funding parts inventory is a catch 22 for a small business person, especially one who is just starting up a new company.
It’s very difficult to get commercial financing to cover inventory purchases so you have enough parts and materials to start producing the products you’re trying to sell. Therefore, it would be common to try to get a higher deposit from a buyer so you’d start having enough funds to buy the necessary parts to build your product.
At the same time though, if you were buyer and you see that the manufacture is demanding a very high upfront deposit, it can tell you that that company is under capitalized. And if it’s under capitalized, it may be on thin ice financially until it can finally start producing enough units to make a profit and put some money toward maintaining a healthy inventory.
So there’s no real easy solution to a buyer looking to deal with a new company or an under capitalized company. The best thing perhaps is to try to find information, reliable information about the reputation of the people behind the company you’re dealing with. Of course these days with all the BS reviews on yelp, that isn’t that easy either.
We need to try to support the growth of small businesses because in many ways they are the heart of our economy if you read the statistics about this. At the same time though it’s a painful lesson in trust for a buyer to worry about losing his deposit to a company that is spiraling the drain.
One of the benefits of reputable sites like the expo forum is that we members who’ve had positive or negative experiences with vendors can share our opinions and experiences with others. In this case, clearly there has been a teachable moment with the problem shared by the OP.