How Crowdfunding Can Help You!

Kickstarter, Indiegogo, Plumfund. These are just a few crowdfunding companies that are capitalizing on the need entrepreneurs have for funding and the fact that people in general, like to be part of something bigger than themselves. The truth is, lots of people are willing to part with a little bit of money in order to play a role in bringing the next big thing to market. Enter crowdfunding, the social entrepreneurs fundraising strategy that is breaking down barriers to the venture capital market and providing millions of dollars every year to game changing companies with irresistible ideas.

 

New crowdfunding companies are popping up every day. In fact, it’s become such a huge phenomenon, that anyone can start a crowdfunding site in minutes thanks to a handful of developers that have created crowdfunding plugins for DIY WordPress websites. But that doesn’t mean small business owners should jump at the first opportunity they see to play in the crowdfunding game.  There are good deals, bad deals and a whole bunch of ho-hum deals out there. And small business owners like you are responsible for sifting through the fine print to ensure they get what they really want. Furthermore, the crowds that are pulling out their pocketbooks are more demanding and discerning than ever—making the process of securing crowdfunding not quite a simple as it may appear. That’s why today, we’re going to help you understand what you need to do to launch and run a bullet-proof crowdfunding campaign that will help you get your hands on the money you need.

 

The Hidden Benefits of Crowdfunding

While crowdfunding is an excellent source for raising cold hard cash, that’s not all that it is. I think of these sites as being focus groups, on steroids. Here’s why: if you think you might be onto something and you want to test the marketplace to find out, there’s no better way to discover what people think than to ask them to pay for something that doesn’t exist yet. We live in a culture of immediate gratification. We simply don’t like to wait. But we will if we see something worth waiting for. It happens every single day on these crowdfunding sites. Consider it the ultimate form of validation.

 

We can’t forget about the value of visibility. If you play the crowdfunding game right, you’ll get visibility that will stretch lightyears beyond your budget. Social media makes spreading great ideas simple and fast. When you create something irresistible and feature it on a crowdfunding site, it sparks conversations that people bring to the social media sphere. A lot of people.  And where there are people, there is money.

 

How To Create A Winning Crowdfunding Campaign

  • Pick your platform: Do a quick Google search on the best crowdfunding companies and you’ll find lots of options to research. Once you get on the sites, consider first how much traffic they get—as the volume of traffic they do or do not receive directly impacts the number of eyeballs that will see your campaign. Next, find out how much of the amount raised you’ll have to share with the crowdfunding company and at what point in the campaign they’ll collect. Also, look carefully at their terms and find out what happens if you don’t reach your goal—as some companies won’t give you a dime in that case.
  • Determine your launch date: As they say, timing is everything. That’s no different in the crowdfunding space. Mid week launches are preferred over weekend launches. Launching during the holidays is almost always a bad idea. Do your homework and determine your launch date accordingly.
  • Identify your funding goal: How much money do you need to raise? Be aware of the fact that you don’t get to keep every penny you make. A portion of your proceeds will go to the crowdfunding site; consider it your fee to get in front of their audience. You’ll also take hits on credit card fees. You’ll need money to fulfill on the rewards you offer as well. And if you want to play it safe, you’ll work in some extra cash so you have a stash to address any unexpected nightmares surprises—the kind that inevitably show up at some point. After all, Murphy’s Law applies to all of us.
  • Craft your rewards: When people fund your campaign they expect (and deserve) to get something more than warm and fuzzy feelings in return. Rewards are just that. The most popular pledge on Kickstarter is $25. What can you give your supporters in exchange for that? Some platforms allow you to limit the number of rewards you offer at certain contribution levels. That’s helpful if your rewards are something that require your time to create, because there’s only so much time in the day. However, don’t feel like your rewards all have to be tangible products. Some of the most appealing rewards come in the form of recognition. If you’re selling a series of products, offer to name one of them after a backer. If you’re selling a book, include a mention of a top supporter on the dedication page. Be creative and have fun with this part—people offer all kinds of worthless coveted rewards that tickle the funny bone more than anything and they’re wildly successful at it. And be sure to set realistic deadlines on when you’ll deliver the rewards. No one likes someone who over promises and under delivers.
  • Create your launch plan: You’re going to need a promo video. Will you hire a videographer to help or do it yourself? Will you hire a copywriter to create your script or have a go at it on your own? Will you have to buy new equipment? Clothes? Makeup? All of these things take time and you need to plan accordingly. Make a list of everything you need to do and assign dates to each item on your to-do list. If you’ve got a team, make sure everyone is on the same page with the plan and that they all understand what needs to be done, by when and by whom.
  • Be honest: There are risks and challenges with every new venture.Your team and your backers deserve to know what yours are. Share them in your campaign. And also share your plans so they know how you intend to overcome obstacles that get in your way. Your backers are also going to want to know what you’ll do with the money you raise. Tell them your plans so they can be part of your journey.
  • Showcase your credibility: Got awards? Media coverage? A social media community that raves about you? Tell us all about it. Not in an arrogant, “can’t get enough of yourself” way but in a way that reassures us that you’re just as cool as we think you are.

 

Crowdfunding is smart and often, an entertaining way to get a cash infusion. It usually requires creativity and a well-planned strategy, but play your cards right and you might just wonder how you ever lived before crowdfunding became a thing.

 

To learn more about how you can raise capital, check back next week to learn all about investors, where to find them and what they look for.

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