[HALIFAX, NS] — In a tough economic climate when traditional lenders are unwilling to help, what’s a small business to do?
If you’re Leo and George Christakos, you take matters into your own hands and find an unconventional way to help finance your business expansion. The pair are now hoping other small businesses follow their lead and consider turning to alternative fundraising methods.
The father/son team co-own Halifax’s Brooklyn Warehouse. They wanted to expand the restaurant on the corner of Windsor and Almon streets to include a permanent, year-round patio. They had a deal worked out with their landlord for five years rent free, if they built and paid for the renovation.
“It’s difficult to get a small loan of $30,000 to $50,000, and on top of that the restaurant industry is not necessarily looked upon favourably by the banks,” Christakos said.
Without that capital, they were stuck. At the 11th hour their landlord agreed to help fund the renovation.
If the loan could be repaid immediately, they’d get the space free for five years without paying any interest.
With $30,000 being their share of the project cost, the Christakos family turned to their customers and supporters using a marketing method called crowd-funding. For more than a decade, many entrepreneurs have used crowd-funding, loosely described as requesting and receiving small cash donations from many investors.
Despite its popularity in some markets, crowd-funding wasn’t particularly well known here in Nova Scotia. But the Christakos men decided to give it a whirl. They turned to their customers and supporters, offering a variety of rewards depending on the amount donated.
For example, a $25 donation nets a Brooklyn Warehouse t-shirt and your name on the company’s online supporters page. A $100 donation results in dinner for two from the chef’s featured menu with your name and signature permanently displayed on the restaurant’s wall of supporters.
“We thought it would work well with the restaurant, and it had been successful for a number of restaurateurs who’d done it,” Leo Christakos said. “It’s a great way not only to fundraise, but as a promotional tool.”
As of last weekend, 103 backers had donated $21,450, which accounted for 71.5 per cent of the project. Although the 60 day initial fundraising period has ended, Leo Christakos said they decided to leave their donations webpage open for awhile longer.
“I’m not really too surprised, because I figured we’d get close. I thought we were successful when we hit $10,000,” he said. “Here in this region we weren’t exposed to that sort of thing except through the Internet ... but I had faith in the premise.”
Such faith that Christakos is hopeful other local small businesses will follow in their footsteps.
“This isn’t just about us. We really want to promote the whole idea of crowd-funding as an alternative to typical lending,” Christakos said. “With a product or service attached to what you do, you can promote your business, get the funding you need and capture the attention and good will of your audience.”
