Usually, one of the scariest things about starting a new business is the financial gamble. After all, what happens if you scrimp, save and call in favours to fund a new venture, only to find that the market simply isn’t there? Unfortunately, it’s this element of risk that puts many people off of starting out on their own. But here’s how you can use preordering to ease that pressure, launching your business in a risk-free way.

Essentially, a preordering system does exactly what it says on the tin: it allows customers to place orders for products before they are physically in stock. For sellers, it’s a great way to gauge actual interest in something before forking out the cash. Of course, there are other ways to determine whether or not people are likely to buy your product – market research surveys, for example, or building up reliable mailing lists. But the best way is to get your future customers to put their money where their mouths are and order up front.

Another great thing about preordering is that it can create an air of exclusivity around your product. Sure, you might be using this system because you don’t want to take an unnecessary financial gamble, but with the right marketing you can make it seem as if your product is heavily in demand. Take, for example, the buzz surrounding the Playstation 4 when it was released just before Christmas in 2013. Thanks to a powerful marketing campaign, the company secured some 1.5 million preorders – and a spot on every teenager’s Christmas list.

Of course, you probably won’t have the brand recognition or the marketing budget to compete with the likes of Sony. But you can still utilise techniques such as strategic release dates and media buzz to create a sense of excitement around your product – and start reeling in those preorders.

But this system isn’t just a clever way to make sure there’s demand for your product – it can also act as a funding model in its own right. If you’re short on capital, gathering money from preorders can actually help to fund production, but you’ll need to be sure to plan accordingly. Make sure that you have a clear idea of the associated costs, and just how many orders you’ll need to take to be able to fulfil your obligations. After all, nothing destroys a new business quicker than a failed preorder campaign, leaving customers disappointed, out of pocket and unlikely to give you a second chance.

In other words, preordering can be a great strategy – if done properly. Put a foot wrong, though, and it could spell disaster for your new venture before it’s even begun.