Let’s put aside all the conventional ways we can raise money for our businesses. Now, let’s take a look at some of the unconventional, yet clever ways entrepreneurs are raising money. Desperate times do really call for the desperate measure – or should I say clever ways.
Some of the ideas listed below are truly interesting. It’d be a good idea to speak to a financial advisor first before considering taking up any of these.
1 Amateur Shares
During the course of my work, I have met quite a number of budding capitalists seeking consultation. They have large sums of money which they are willing to bet on companies they think will do great. You can get them to buy some shares and promise to pay them back at a profit i.e. you can promise to pay back at the rate of 1.50 on the year. The .50 is the value your business provides over the course of the year which can be broken down into the conversion of business from a ready market.
Most investors will not look twice at a company that does already have a ready market, with existing sales to turn their money to profit. Potential needs to be measured. To avoid people being sceptical about what you are doing, you’ll need to do your homework and provide real numbers to back up any offer you provide. As such, present your company in the best light possible, highlighting the real value that the company provides for the investor.
2 Bater Trading
This is a low-level lending option that’s great and cheap. If you belong to a community of entrepreneurs that have services/products you need and also need the services/products you offer, then you can barter your trades. Income and expenses do not always necessarily have to mean cold hard cash trade. Any trade credit created from the exchange of goods and services can be used to “purchase” a product or service from someone else in the barter system.
It is understandable that we may not all have the skills/products to trade up for more valuable items. However, barter is a great useful tool for business owners looking to stretch their budget. In this Jubilee economy, barter trading will ultimately help your bottom line and thrive for long.
3 Customer Financing
Sometimes during the course of your business, you will meet customers that appreciate what you do and gain a lot from your business. With this, you can raise some capital in two main ways:
- Ask them upfront if they can finance your business (that is if they have the means to do so),
- Take upfront payment for products or services before you actually deliver.
Most of the times, customers would be more than happy to make an upfront payment if the product or service is of great worth to them. Try your luck!
4 Crowdfunding
Crowdfunding goes against the mainstream approach to business finance and many businesses have not tried it yet. Crowdfunding basically when a business owner/individual offers an idea that people love to support with small contributions. The aim is to get a lot of people to buy into your idea and raise a lot of money. The internet is a great place to start if you have the right kind of product/exciting project. You can easily launch your campaign via a crowdfunding platform (add some intelligent promotion tactics) and present your idea to thousands of potential backers.
Many businesses are using crowdfunding to do various things to move their businesses to the next level. Such as expanding operations, launch new products, raise donations, raise venture capital and more. The internet is full of people willing to support new concepts and products or want to be a part of the growth of a budding business.
For a business running and operating in Kenya, you can apply for crowdfunding from LelapaFund, M-changa, FundRazr, Kickstarter, Indiegogo and much more.
Types of Crowdfunding
There are four types of crowdfunding for businesses:
- Reward-based offers backers a reward for their investment. These could be handwritten thank you notes, to tchotchkes, to even simply a t-shirt.
- Equity-based offers backers an equity stake in your business. Make sure you understand how exactly this is done. That is, understand the rules that govern (legal implications) this kind of campaign with the help of a qualified financial consultant.
- Lending-based offers lower interest rates and more flexible terms to the borrower. The investors, on the other hand, are seeking equity – thus similar to equity-based crowdfunding. Therefore, be careful to investigate it very carefully. Understand the rules that govern such transactions with the help of a qualified financial consultant.
- Donation based offers backers tax exemptions for the donations and an opportunity to uplift a non-profit. This style of crowdfunding is for registered non-profits an opportunity to raise donations.
Ready to Launch
Finding funding can be the hardest part of getting your business off the ground, but it can also be a very rewarding experience. Though it is a long road to success, finding allies along the way (whether friends, investors or capitalists) to help you keep your business afloat can make all the difference in the world.
All the Best!
Image credits: Top, by Savvas Stavrinos via Pexels.
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