Crowdfunding
Financing a business, is tricky, grueling, and frustrating. When decisions about your business are not within your reach, life gets difficult. Perhaps you’ve dealt with bankers and investors and have gotten no love, what are your other options?
We’ve talked about Bootstrapping as an alternative method, but Crowdfunding may be a viable option as well. Crowdfunding is a popular method for raising funds for a business by obtaining small amounts of money from a large number of people, typically through online platforms.
For over a decade, start-ups have used reward crowdfunding to raise billions of dollars of early-stage financing. These companies pre-sell products to consumers while the products are still under development, and customers receive the product as a “reward” for their support when development is finished.
We are all familiar with Crowdfunding a business when they have experienced some disaster, usually natural disaster, but Crowdfunding can also be used for established companies when they are developing a new product or service.
There is another important aspect to Crowdfunding; it has become a valuable way for companies to gain feedback, even better than focus groups. People willing to invest in your business will not only provide cash but also suggestions and advice, they want to see you succeed.
However, you better be prepared to listen and engage with that feedback, or it could backfire on you. Crowdfunding customers offering not only concrete product ideas but even connecting companies to potential suppliers and retailers. They want to feel informed and involved in the product that they will eventually receive, and many want to think of themselves as co-creators. When done correctly, they can be invaluable in getting the word out about your product.
When it comes to funding and financing it is never easy or simple. Crowdfunding is no different but here’s a step-by-step guide to help you crowdsource funding for your business:
- Set Clear Goals:
- Define the purpose of your crowdfunding campaign. Clearly articulate what you’re raising funds for, whether it’s launching a new product, expanding your business, or another specific goal.
- Choose the Right Crowdfunding Platform:
- Select a crowdfunding platform that aligns with your business type and goals. Popular platforms include Kickstarter, Indiegogo, GoFundMe, and others. Each platform has its own rules, fees, and audience, so choose one that suits your needs.
- Create a Compelling Campaign:
- Develop a compelling and well-detailed campaign page. Include information about your business, the purpose of the campaign, the amount you’re looking to raise, and what backers will receive in return (if applicable).
- Craft a Persuasive Pitch:
- Create a video or a written pitch that clearly communicates your story, passion, and the impact of your business. Make it engaging and shareable to attract a wider audience.
- Offer Attractive Rewards or Incentives:
- Provide appealing rewards or incentives for backers. This could be early access to products, exclusive merchandise, or special experiences related to your business. Tailor rewards to different contribution levels.
- Set a Realistic Funding Goal:
- Determine a realistic funding goal based on your financial needs and the scope of your project. Be transparent about how the funds will be used and why the chosen amount is necessary.
- Create a Marketing Plan:
- Before launching, build anticipation for your campaign. Utilize social media, email newsletters, and other channels to inform your existing network and generate interest. A strong pre-launch strategy can significantly impact the success of your campaign.
- Launch and Promote:
- Launch your campaign and actively promote it throughout its duration. Regularly update backers on your progress, share milestones, and respond promptly to comments and questions.
- Engage with Backers:
- Foster a sense of community by engaging with your backers. Respond to comments, express gratitude, and keep them informed about your business’s journey. Building a connection with backers can lead to repeat support in the future.
- Follow Through:
- If your campaign is successful, fulfill your promises and deliver rewards in a timely manner. Keep backers informed about the progress of your business and express your gratitude for their support.
If you think Crowdfunding may be a solution for you then this becomes a real marketing exercise. So, remember the conversion equation throughout the whole campaign. Interrupt, Engage, Educate, and Offer should be your goal throughout the following steps:
- Optimize Your Campaign Page:
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- Make sure your campaign page is visually appealing, easy to navigate, and includes high-quality images and videos. Clearly explain the problem your business is solving and how backers’ support will make a difference.
- Leverage Social Proof:
- Highlight any endorsements, positive reviews, or testimonials your business has received. Social proof can build trust among potential backers and increase the credibility of your campaign.
- Create a Sense of Urgency:
- Encourage early contributions by incorporating limited-time offers or early-bird discounts. Creating a sense of urgency can motivate potential backers to act quickly.
- Utilize Email Marketing:
- Build an email list before launching your campaign and use it to reach out to potential backers. Email marketing can be a powerful tool for keeping your audience informed and engaged.
- Collaborate and Cross-Promote:
- Partner with other businesses, influencers, or organizations that align with your campaign. Cross-promotion can help you tap into new audiences and increase visibility.
- Run Social Media Ads:
- Consider investing in targeted social media advertising to reach a broader audience. Platforms like Facebook and Instagram allow you to specify your target demographic and increase the visibility of your campaign.
- Offer Early Access or Exclusivity:
- Provide backers with the opportunity to be the first to experience your product or service. Early access or exclusive perks can entice supporters who want to be part of something special.
- Be Transparent About Risks:
- Clearly communicate any potential risks or challenges associated with your project. Transparency builds trust, and backers appreciate honesty about the potential hurdles you might face.
- Engage with the Crowdfunding Community:
- Participate in discussions on crowdfunding forums and communities. Engaging with the crowdfunding community can provide valuable insights, support, and even additional backers.
- Post-Campaign Engagement:
- After your campaign concludes, continue engaging with your backers. Provide regular updates on your progress, share behind-the-scenes content, and maintain an open line of communication.
Remember that while crowdfunding can be a successful way to raise funds, it requires effort and strategic planning. Regular communication, transparency, and a compelling story are crucial elements that can make your campaign stand out. Additionally, learn from the experience, whether your campaign is successful or not, and use those lessons to inform future fundraising efforts or business endeavors.
