Starting a subscription box is one of the best ways to launch a promising business with low startup costs. And though you can get going for little money up front, there are still expenses you’ll need to cover when it comes to software, packaging, and product.
So, If you’re looking to secure capital before launching your business, check our 3 tried and true strategies for funding a subscription box.
Running a pre-sale campaign
A pre-sale campaign is simply taking orders for your subscription before you’ve sourced or assembled your box. This method allows you to collect the funds you’ll spend on products and packaging, instead of having to use your own capital. Depending on your pricing, this can mean forgoing profit for one or two months while your pre-sale money goes towards getting your first shipments out the door.
As a disclaimer, pre-sales are riskier than prelaunches in that you’re collecting customer information and money rather than email addresses for future marketing. Once subscribers have pre-paid for a box, you are obligated to fulfill the transaction and send them product. This is unlike a traditional prelaunch in that you are skipping the validation phase and going straight to selling. So whether you sell 3 boxes or 300, each one of those customers needs to receive a subscription box from you.
Using crowdfunding sites
Sites like Kickstarter and IndieGogo have helped thousands of businesses validate their idea, secure funding, and launch within weeks or months. Subscription boxes are no exception to the crowdfunding success story, and, in fact, several Cratejoy merchants launched with the help of well-executed crowdfunding campaigns.
Both Bitsbox (Kickstarter) and Call Number (Indiegogo) secured seed funding through crowdfunding sites, and despite wildly different end goals, were able to launch successfully and grow their businesses from month one.
Depending on which crowdfunding platform you choose, you can set “all or nothing” or “flexible” goals. This is great for subscription box owners who want the option to get fully funded before launch, or entrepreneurs who are willing to get started with a combination of partial funding and their own capital.
Applying for small business grants
If you or your subscription box serves a greater cause or fits into an underfunded community, you may be able to secure grant funding before launch. Subscription box owners gearing their business towards areas like education, charity, women’s empowerment, and other humanitarian causes may find great success applying for grants as a way to secure seed funding for their box.
A simple google search reveals how many niche business grants are open to different types of people and business ventures.
Already running a business but need working capital?
Depending on your business’s financial standing, small business lenders like Kabbage can get you approved for up to $250,000 loans within minutes.
This is most appropriate for subscription box businesses that are operating at scale and will be able to pay back their loan + interest. After all, if taking out a business loan won’t help you increase revenue beyond the initial loan amount, you should not take one out.
Interested in learning how most small business owners use their loan ? Check out a snippet of one of Kabbage’s infographics:
Cratejoy is an all in one subscription commerce platform that includes everything you need to start your own subscription commerce business online. Try it free for 14 days.