Do you need to start a business and you do not know how to raise funds? Stop the struggle and find knowledge in this article.

The article covers various ways that you can fund your business without too much struggle. It will also attempt to answer the frequently asked questions. It is focus its continents on customer funded business.

so prepare to read various models that comes with customer funded business models.

Make sure you choose one that best suits your business.

What is customer funded business?

These are businesses in which customers play a key role in making the business grow. the businesses come in many models that a seller ensures he satisfies customers needs as he gains.

These customer funded business are grouped into models, each model can be used independently or a combination of two or more.

Here are good models you can consider when you want to start a business using customer funded model.

A much better strategy is to forego venture capital entirely and instead ask your future customers to fund your startup. If you can find enough customers who will pay you well (ideally in advance) for the solution to their problems that you are developing, you will not need to raise capital elsewhere.

Before we get to that you need to;

• Have a business plan

• Know the merchandise you want to deal in and where found

• Raise some venture capital

Customer funded business models include:

1Matchmaker

This model brings buyers and sellers together without ever touching what is bought or sold or owning the assets transacted.

The matchmaker business model involves developing a method for matching buyers and sellers. You generate the order or transaction without taking ownership of the goods and are compensated for doing so. The matchmaker model requires little initial investment and has the potential to grow to a significant size if done correctly.

2Pay in advance

Pay-in-advance. is when a company requires a deposit or the full price before shipping and supplying a product or service. The advance payments from the customers are then used to finance the business.

You simply ask people to pay you before giving them what they've purchased.

3Subscription

The subscription business model, which is widely used in the publishing industry, involves customers paying an ongoing fee. This is ideal for delivering something repeatedly over a long period of time.

Netflix is one such example of a company that uses a subscription model.

4Scarcity / Quick Sales

This is also called flash sale. The scarcity business model involves offering something in limited quantities or for a limited time. You use scarcity to obtain payment from the customer before the goods are delivered, resulting in negative working capital requirements.

It can also be where you produce less of something over a shorter period of time in order to entice the customer to buy it right away. By doing so you generate money.

5Service-to-product

A service-to-product model is a business model in which a company begins by providing customized services to a customer and then uses that expertise to deliver a packaged solution that appeals to a larger market. With this business model, your initial customer effectively funds the development of your product for you.

So, how do you know which model is best for your business?

You need to way all the models and try to fit each into your business if not ask yourself the following questions.

For the Pay-in advance model:

• What could you persuade your clients to pay you in advance for?

• Why might it be advantageous for my customer to pay me sooner?

• What additional value do your customers receive by paying in advance?

  Regarding the scarcity model:

• Can your offer be time or quantity limited to create an exciting scarcity?

• Why might your supplier be willing to extend terms?

Regarding the subscription model:

• Could you persuade your customers to subscribe rather than reorder from you?

• Is there something in your product mix that customers would be willing to get by subscription that just shows up every month, like the Dollar Shave Club or how Adobe switched to a subscription so customers could always have the most recent version?

Regarding the matchmaker model:

• Do you see a problem you can solve by acting as a matchmaker, bringing buyers and sellers together?

• Is the market for your buyers and sellers fragmented?

Regarding the service-to-product model:

• What service, which you provide repeatedly, could you put in a bottle or a box, similar to how Microsoft did to scale?

Frequently Asked Question and Answer

What Are Some Customer-Funded Model Examples?

The matchmaker model is used by companies such as eBay, Expedia, Uber, and Airbnb.

The subscription model is exemplified by Netflix. Zara is the scarcity champion of the world. They limit the quantity and duration of each style's availability, so their customers know that if they don't buy that Zara dress now, it will be gone tomorrow.

Zara rotates its inventory every 30 days but only pays its suppliers every 60 days, providing them with 30 days of supply money to grow their business.