What if you could bypass the big banks and find dedicated investors to help fund your business?
In the real world, business doesn’t work that way. Banks and lenders expect quick repayment and lots of interest.
If you want to get money to start a business there’s generally one of three ways to find it:
- Take out a high interest loan with monthly payments, followed by a large lump sum repayment of the principal after the term of loan matures.
- Give up a controlling interest in the business to venture capitalists in return for funding, and a strict deadline for achieving profitability.
- Max out your credit cards and pray like hell.
What if there was a better way?
Slow Money is a Socially Responsible Investment
The concept of ‘slow money’ is based on building up sustainable local economies. There are lots of businesses where I live in Burlington, Vermont that get started using this ideology. People source food locally, and try to grow revenues locally too.
There’s profit and loss involved with slow money, but investors have an interest beyond just repayment in seeing the start-up succeed. Local lenders form partnerships with entrepreneurs and agree to provide working capital or services.
Here’s where slow money gets socially responsible.
Let’s say you’ve proven that your small natural foods lunch counter is bringing on $250,000 in revenue per year and you want to expand into new locations. Your end goal is to put a healthy meals alternative next to every McDonald’s located in progressive minded metropolitan areas. To get this dream moving you need $500,000 and a design firm to create the unique space you envision come alive.
Why not crowdsource a slow money initiative in your own community?
Partners, Not Just Vendors
Sure, it takes some salesmanship and proof you have a viable business plan (this is about partnerships, not charity). By finding the people in your regional community on social networks you can begin an ongoing conversation and gain ‘buy-in’ before ever having to ask for a dime.
I’m noticing Vermonters begin discussions outside of the traditional channels to find service providers who are willing to accept slow payments in return for large opportunities if the business succeeds. In the case of the design firm, you provide architectural plans at no upfront cost. After three to five years you begin receiving interest payments and the option to reinvest the payments you would have received back into the business in the form of an investment. Opting for cash only means you get paid slowly over the course of a few more years.
Here’s why this is valuable to the service provider:
Our design firm receives a license to design all of the local food counters in every metropolitan area the business expands to. Further, the design business is comprised of small business owners who must network to find new jobs, and being introduced to the people who front the $500,000 working capital could always result in a design job down the road — and more networking opportunities.
Partnerships. People helping people in their community succeed without relying on traditional banks and lending institutions (we’ve heard plenty about them the past several years). Start your slow money search by finding conversations and people on Twitter Search and your social networking communities. Building these partnerships require lots of trust and hard work, but they do exist if you look in the right places.
Resources: Slow Money Alliance, Principles of Slow Money
