Chances are pretty good, if you are reading this, that you are either related to me or you own a small business. Chances are also pretty good that your small business is not nearly as profitable as you would like it to be. The current state of the economy has made it more difficult than ever for small businesses to survive, as consumers head for big-box stores to try to save a few dollars. That, in turn, makes it extremely difficult for you to survive and build your small business.
Sales are down. Profitability is down. Growth is nonexistent. New customers are harder to come by. All bad news—until now! There are ways to grow your business in this lethargic economy. Extraordinary times call for extraordinary solutions and I have a few ideas for you to build your business right now while record numbers of businesses are closing their doors.
Do you need to raise some money for bills? Don’t throw in the towel. Have an old-fashioned barn raising. Instead of gathering friends and neighbors to lift beams, ask them to open their checkbooks. Offer your customers a gift certificate or gift card valued at $600 at a price of $500. That’s what the Comfort Lounge in Hastings-on-Hudson, N.Y. did and he raised over $25,000 in just six months. The community rallied around this business and it is thriving today.
Do you want to expand? Don’t get angry with the bank that denies you the loan. Offer an IPO. That’s right, sell shares in your business to people in your community. One business, Vox Pop, a popular bookstore in Brooklyn, N.Y. was drowning in $190,000 of debt. The owners decided to sell shares in Vox Pop for $50 apiece. They went to community meetings promoting the idea and tried to sell shares to every person that walked through the door.
Did they succeed? You bet they did. They raised $64,000 in just 10 days! What did the new shareholders get in return? Just a promise that when the business turned profitable again, they would get a small piece of the profit. Before doing this, you should speak with your attorney and accountant to make sure you set everything up properly. I know a shareholder program works, however, as it has been extremely successful for the Green Bay Packers.
Presently, 112,120 people representing 4,750,937 shares can lay claim to owning a piece of the Packers. There have been 4 stock sales in the last 90 years. In 1923, they sold the first 1,000 shares for $5 each. In 1935, they raised another $15,000 after the company had gone into receivership. In 1950, they sold another 9,500 shares. In 1997, the Packers decided to sell more shares for capital improvements to their stadium and other facilities. In 11 days, they raised over $7 million.
What did all of these people get in return? A stock certificate. That’s it. And, they have the right to sell that certificate back to the Packers at a fraction of the price. Limited transfer of shares to heirs and relatives is allowed. In other words, you don’t have to promise much to successfully raise money in your community. Your patrons just have to see the value in keeping small businesses within the community. Heck, you could sell $50 shares and promise free dessert with meals for life. Keep it simple and make it fun. Your customers will do the rest.
Or, you could sell memberships in your business based on museum models. They could pay annual dues for premium tables, front-of-line privileges or get their name on a plaque. There are countless ways to raise money. You just have to use your imagination.
Oh yeah ... and thanks for reading this, Mom.
