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The Sausage Share – Crowdfunding at the Krauts’

Ever thought of asking your customers for financing?

Crowdfunding is an innovative way of gaining funds for business projects by external financing. Instead of having a bank being your financing partner, the investment is done by an anonymous crowd or by a certain group of stakeholders. For contributing a relatively small amount of money, each crowdfunder receives a yield in form of rights, cash or contributions in kind. In times of widespread mistrust against financial institutions, crowdfunding is an attempt to avoid the middleman (the commercial bank) and to establish direct contact between the private investor and the entrepreneur who is seeking for funding. There are several online platforms, such as kickstarter.com, acting as facilitators.

So far, crowd funding has mainly been used by start-ups and/or creative communities for funding design, music or media projects (also see an article on our Spanish website). But recently a traditional medium-sized family business entered the scene and became a hot topic in the German-speaking online media. A butcher in Nuremberg, Germany, now offers the Sausage Share for financing its business expansion. How does it work? Clients can invest a minimum sum of EUR 100.- to purchase a bonus share at an interest rate of 7-10 % with a minimum duration of three years. The yield is paid in goods vouchers at a predetermined date annually.

This creates a unique win-win situation. For the client, it is hard to find an investment alternative with a comparable fixed interest rate. The butcher produces his goods at a lower cost then the selling price, and therefore, his financing costs are lower than the interest payments received by the investing customer. Besides that, he increases customer loyalty, attracts new clients, creates a special consumption/investment experience and avoids complications which can arise from institutional funding.

However, in this case it requires the reputation of a traditional, sustainable business to ensure the customers’ trust and willingness to invest. Furthermore, funding laws have to be considered. Thus, the butcher can only issue a maximum of 900 shares to comply with fierce regulations. Meanwhile, the customer bears the risk that if the butcher goes bankrupt, he or she cannot lay a claim.

Even so, Sausage Shares at the Nuremberg butcher shop have proven to be best sellers and shall act as role models for other SME businesses searching for an alternative to institutional funding and attempting to create extra value for their clients.

Note: If you came across another successful crowdfunding project, please feel free to share it with the WLT-community by sending a comment on this article.

 

Source : Hannes Treichl, kundenwirken.com (all German)

More info : kickstarter.com

Image : Metzgerei Weckerlein GmbH

  • Lisa Conner

    I have heard about a very interesting new project on IndieGoGo, which is called “Express Yourself, Own Yourself.” (http://indiegogo.com/eyoy). They do not use any social media network to present their project because of their principles. I think an article by you about their project would help them a lot to get it more public.

Author Spotlight

Julia Wild

 

Current position

. Researcher and lecturer in international marketing, business-2-business marketing and market research

Former positions

. Commercial project manager for civil engineering projects in South America and Asia

. Intern in the Commercial Office of the Austrian Embassy in Argentina

. Business development intern at an industrial logistics provider, Austria

. Project management intern at a market research agency, Austria

. Management trainee at a high-end hospitality chain, China

Education

. Doctoral candidate in marketing

. Degree in business administration, Austria and Spain

Interests

Emerging markets, export management, industrial services, industrial marketing, market research, corporate finance, open innovation, strategic foresight, knowledge management, rural ... Read Full

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