Whether you are starting a new business looking to expand your existing offer by adding a new product line or simply expanding your space, funding will be a crucial part of your endeavor. Sure, you can look for investors or get a bank loan, but you may also look at more innovative ways to raise your funds. To help you in that process, here are four innovative funding ideas to help your small business.
The concept of crowdsourcing is beginning to take off among small business owners across industries. Platforms like Kickstarter and Indigogo allow you to post a crowdfunding page for your business or product idea and watch the investments come flowing in.
Crowdfunding is appealing because you can gain significant funds spread over a large number of people. But be careful when setting up your profile: most crowdfunding platforms only allow you to keep the money if you’ve raised at least your stated goal, which means you need to find a balance between an attainable and realistic goal for the funds you need.
In addition, you should also set up rewards for different levels of giving, which will come into effect once you’ve raised your goal and are producing the product.
2) Winning a Contest
Believe it or not, nonprofits all over the country hold contests almost every day to reward entrepreneurship and creative product development. These contests pit business or product roadmap development plans against each other, and you usually have a short time to pitch your idea before having to defend it for a while.
Think Shark Tank, but without the drama. Finding and entering a contest, particularly if your idea is out of the box, can help you raise the funds you need to start or grow your own small business.
3) Friends and Family
Never underestimate the power of your relationships. While the old adage that ‘business and personal life don’t mix’ remains true, you will likely have a number of friends or family members who are impressed by your idea and want to help.
You can approach raising funds through friends and families in one of two ways: either you look for one or two major investors, or you try to get a little bit from a number of acquaintances. The second works a lot like crowdfunding (in fact, you can set it up on a crowdfunding platform for easier organization.
The first, on the other hand, will only work if you treat it as an official investment, setting up a clear outline about how much your investor friend/family member will be involved in your company and day-to-day operations.
4) Product Presales
Especially if you’ve already used more traditional methods to raise funds, you can try producing a limited amount of your product – just enough to showcase its effectiveness and helpfulness – and then begin pre-selling it to a larger audience.
These presales, of course, will only work if you have the trust of your potential customers, which is why producing a small showcase amount ahead of time works best. In addition, you also need to give your customers a clear outline of when they can expect their product, calculating in potential delays during the production. That way, you won’t have to begin refunding the money before your product even hits the market.
Getting funding for your business or product idea is a challenge, especially once you venture outside the traditional realm of getting a bank loan. Fortunately, a variety of innovative funding methods can also aid your small business, and the four above are just a few of the many examples. For more information on small business management and how to manage your customers once you have begun developing your product, contact us.
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