As a small business consultant for over four years, many clients wanted help raising money. My employer forbade us to make commitments regarding getting them money; though we could talk with their bank about savings we found for them and about their financial reports.
Seven Non-Standard Routes to Raise Money
Although some of these approaches bypass raising capital and go straight to getting inventory, I include them because most of the time a small business needs the money to acquire inventory:
– Strategic equity partner
Bartering or trading can be a simple exchange of goods between two businesses or a formalized bartering club that handles the exchanges. When I was in radio advertising sales, it was a common practice for businesses like restaurants, tire stores and concerts to trade out gift certificate, tires, or passes for advertising.
In my service company, some of my major corporate customers were slow paying. When I needed to raise money to purchase a large format printer for a customer, I went to a factoring company to sell some of my receivables. This enabled me to buy and deliver the printer I sold.
While savvy Internet marketers use this approach to develop a new course, having customers purchase in advance applies to many types of businesses. One advantage of pre-selling products is you quickly learn if the market actually wants that product enough to pay for it.
This is a common way of adding inventory without spending money upfront. It enables relatively unknown artists to get their artwork, photography and jewelry in a store. It can also be used for normal products. For instance, you could purchase so many items then the distributor matches your order with extras you don’t pay for until you sell them. American automobile manufacturers offer dealers a form of consignment called flooring.
Find another vendor with a product that you could package with yours then exchange inventory so that you both can sell that package, only paying for your ally’s products when you sell them.
Currently in America, this is limited to donation crowdfunding for special projects. By summer, the SEC will roll out equity crowdfunding as a way small businesses can raise capital from a multitude of small investors.
Strategic Equity Partner
In this case, you sell an interest in your company. Although most investors do so for the return on their money, strategic equity partners invest to ensure availability of a supplier or customer. For instance, if you invent a water purification process and need custom filters for it, you might invest in a manufacturer to ensure you have a source.
These were seven non-standard ways of raising money for your small business or of getting inventory. By you adapting them to your needs, you will have a healthier, more profitable company.
More from this contributor:
First Person: What Is a ‘Factoring’ Loan?
First Person: 5 Ways to Reduce Obsolete Inventory
First Person: Structuring a Profit Sharing Plan to Motivate Employees