Guidant Financial Group Blog

An article came out last week on BusinessWeek.com about a unique financing option for established business owners: Let your customers do the financing!

Aside from the fact that they are financing your expansion whether directly or not, this option does have several attractions.

First and foremost, as the article points out, having your customers become investors in your venture only helps to solidify their loyalty. Secondly, one can only imagine the word-of-mouth advertising that you can generate for free: if your favorite customer has invested $5,000 in your new biz, you can guarantee that he/she is going to have every family member, friend and acquaintance doing business with you.

The one major hurdle however, is: How do you get them to finance your venture in the first place? Obviously, if you don’t have loyal customers to start, you can’t just ask any Joe Schmoe who comes into your facility for a few grand.

Additionally, you will want to make sure that all your investors fully understand what they are getting themselves into. Just because a woman is a proponent for your one-of-a-kind home-made cheeses doesn’t mean she’s extraordinarily adept at financial matters.

All things considered, if you have the loyal customer base needed to make this kind of financing viable, it’s a very interesting alternative to consider.