What? Actually, no. This is bad, on so many levels. It's especially bad for a small business to be run this way, because it means that this company is selling products that A. don't exist and B. they can't actually make until they sell a knife to someone else, because they took the money you paid them to have your knife made, and used it to pay their bills instead. No company who runs this way will ever find themselves "catching up" because the model will always depend on them bringing in new preorders (also known as vaporware). So what happens when those preorders dry up? If S?K stopped getting paid-up-front preorders tomorrow, they wouldn't be able to make ANY of those knives they still owe people, that is a fact. Now, do you see why that's a bad way to run a business?
And look, there are a ton of small knife companies out there who have been able to create and grow a business without doing this. Many of the companies you see us discussing here every day are small businesses. Rick Hinderer, Emerson, Spyderco, Buck, the list goes on. Somehow those small companies are able to make knives, sell them, and continue to make new designs, and sell those (and actually get knives into peoples' hands!!!!!!!!) without resorting to these shady business practices.