When you first decide to strike out on your own and start a small business, one of the biggest initial challenges you will face is funding your new venture. There are lots of ways to finance a small business – including venture capital, angel investors, and business loans. Each of these come with their own pros and cons, of course, and you have to decide which one best aligns with your business goals.
If you decide that it’s important to your vision of your own business to maintain full creative control and not feel beholden to a few majority investors, it might be time to get creative. Your options will be different depending on the type of business you plan to start, but today we’ll look at a how a Minneapolis brewpub solved the funding riddle.
Northbound Smokehouse & Brewpub solved their own $220,000 question with a refreshing (pun intended) solution: free beer for life. According to their recent profile on CityLab, the founders of Northbound needed to raise an additional $220,000 in order to launch their dream restaurant, but they were wary of getting involved with investors who had money, but lacked experience in the restaurant industry. Not wanting to put themselves in a position of compromising their plans for the business, they decided to seek a more creative source of funds: crowdfunding.
Image via Northbound on Facebook
Since Kickstarter was not an option (Kickstarters can’t reward investors with alcohol) they did it their own way. Offering friends, family, and interested locals a variety of combinations of lifetime free beer and small stakes in the business, they raised money in increments of $1,000 and $5,000 and reached their financial goals in no time. Northbound is now a thriving local Minneapolis business.
How can you apply this concept to your own business? Think about the three basic elements that make this solution work:
1. It makes use of a trade system that rewards investors with something that is valuable to them, but costs the owners very little to produce.
2. The shareholder investment element of the plan gives investors motivation to do right by the business. Northbound’s investors do not abuse their right to free beer for life because if they drink the place dry, their investment fails.
3. They harnessed the power of the local community. In recent years, the ‘buy local’ movement has created a strong culture of local purchasing that has big benefits for small business owners. Tap into that motivation within your own community!
If you’re thinking about starting a business, or need to take your business to the next level, consider a creative funding solution like Northbound’s that will continue to benefit your business long after the check is cashed.