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Alternative Business Financing Source: Customer Financing

When you're looking for funding for your small business, you may not have the luxury of picking and choosing where you get it.

Fortunately, there are options for you other than the most common sources: loans, angel investors, venture capitalists. One such alternative financing source has been termed "customer financing." This technique was popularized several years ago in 2002 by an Australian beer startup called Blowfly.

Liam Mulhall, CEO of the startup, developed a customer base before a single drop of beverage had been brewed. He used the internet to include customers in the design process, allowing them to vote on everything from the label design to the ingredients. Throughout the process, he developed a loyal group of over 10,000 customers before he even began operating. In addition to selling Blowfly Beer, Mulhall also sold equity in his company to these customers-every time they bought a carton!

Blowfly's innovative strategy had other benefits, as well. Because of the unique offering, they developed a sales base of very loyal customers, and their advertising expenses were essentially zero. Word of mouth allowed them to promote their registered customer base from an initial 140 people (friends of the founders) to more than 10,000. These customer-owners eventually began to receive dividends based on the sales of the beer. This created a further incentive to buy, drink, and recommend Blowfly to their friends.

Customers are a fantastic, but often-overlooked source of financing for entrepreneurs. In addition to providing a service or product, you can also offer them shares in your company. Then, their interests in the company are triple, as they support the company's goal of profit, believe in or love the product (hopefully), and form a natural marketing team as they essentially do free promotion for you. If it's a viable option for you, consider raising capital through your potential customers!

Raise Capital from 40+ Creative & Alternative Sources

Growthink’s Definitive Guide to Creative & Alternative Financing
will guide you through the process of finding and securing creative and alternative sources of financing for your business.

Click Here To Download Growthink's Creative & Alternative Financing Report Today!

Here is a sample of what you will learn in the report:

  • How Kenneth Cole raised millions of dollars in funding for his company when he was flat-out broke
  • Two ways to make your company “liquid” and allow anyone to quickly invest as little or as much as they want into it
  • How to turn your knowledge of your industry into funding for your business
  • The source of capital which is probably right in your neighborhood
  • And more...

Learn More Creative & Alternative Funding Sources for Your Business!

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