Saturday 21 April 2018

Problem Solver: You're supporting crowd funding. What's it about?

Feargal Quinn
Feargal Quinn

Feargal Quinn

Q: I recently read that you are supporting Linked Finance. I don't fully understand crowd funding, can you explain?

A: I am indeed lending my support to this great business initiative. Linked Finance is a crowd funding initiative which means lots of different individuals loan you the money rather than the traditional model of where you would have gone to a single bank or other lending institution.

Say you were looking for €20,000 to expand your business. You approach Linked Finance, who assess your business for suitability and then you create a prospectus setting out what your business is about and why you need funding. This is circulated throughout the Linked Finance database and displayed on its website.

The investors who provide the money are usually made up of private individuals or businesses who decide to do some good with their money and spread it over lots of different projects, thus reducing the risk for them and so that they can also get interest on the money, in some cases greater than they might otherwise get through standard banking.

Once your project is posted, investors decide whether to invest and pledge a certain amount of money at an agreed rate. The combined effort of the investors makes up the total amount you are looking for. Note that if you can't raise the amount you request, then you don't qualify.

Once the required amount is raised, it is then paid out and, as the borrower, you must then repay it, typically over three years. The concept is about making funding through alternative sources available to companies to help them grow at a faster pace. It is a great and practical initiative and hence my willingness to support it.

Q: I am a jewellery designer who has my own business and have a range of premade products and take commissions. The problem is a lot of the work is commission-based which I don't get enough money for and therefore most of my time is taken up doing this and I struggle to produce other products. I am a bit lost about what to do next.

A: Obviously if you are getting commissions then you need to take a bow as people like your creativity a lot. I am aware from talking to other artists and crafters that while many customers want the exclusivity of a commission, they are unwilling to pay the price that it really needs to justify the work which was put in.

I was talking to one artist recently who told me that they had put over 40 hours into one piece of work, but the maximum they would probably get was a little over €200. That is a dilemma.

While your premade range is designed by you, I am sure you have others supporting you in producing this as it is intended to be higher volume. The first thing you need to do is to dramatically ramp up the stock holding at this level. This will allow you to push hard on this more 'accessible' range which should be priced to appeal to the walk-in customer who appreciates a designed product but doesn't have the budget for a commissioned product.

If you succeed in increasing sales, it will allow you to change the price of the commission work to reflect the time that goes into it. As you will have the revenue coming in from the mainstream product, it won't cause a crisis if you lose one or two commissions because of the new, more appropriate, pricing.

What I have described is over simplistic and I am sure you will have challenges in getting new footfall into your shop/studio and you will have to harness all of the online tools and marketing techniques to drive new sales.

What you are doing is rebalancing the formula you are using to a higher volume of more accessibly priced product, and a smaller volume of higher-paid commission work, as the current mix you are getting is not working for you.

I wish you well and do let me know how the new strategy goes.

Send your small business questions to

Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business