Crowdfunding is controversial, but its increasing role in business startups can’t be ignored. One entrepreneur explained why he used crowdfunding: it allowed the business to test the market temperature for a new product while not diverting resources away from core profitable business lines. Kickstarter is a popular and successful crowdfunding site, but you may not know that there are more than 500 such crowdfunding sites on the internet.
What does it take to launch a successful crowdfunding campaign?
It takes a professional presentation with quality images, copy and video content with a market focus. It is not about you or your technology. It is about what the investor gets in return for supporting you at this early, high-risk stage. Remember, your campaign is a commercial aimed at getting customers to buy your product or service. They want to support start-ups, but at the end of the day, decisions are made on “what’s in it for me?”
Your supporters are investing in you and your story. They feel a connection with you even though they have never meet you.
Keeping your supporters engaged throughout the process is critical to campaign success. Be responsive to questions and regularly post progress updates. Let them feel like part of the story as it unfolds in real time. Most importantly, be sure you are delivering on your promised milestones and participation rewards.
Before you even create a campaign, do your homework and learn about the available websites and in great detail about the one you decide to use. Each one has different analytic tools and campaign management tools. Study what products and services had successful campaigns on each platform. What product category did successful campaigns list under? How much investment did they seek? What did they offer investors? What platform offered the best results for products and services in your industry?
Don’t underestimate the time investment required for a successful campaign. It will not be a one-day project; it will be a full time job for one to three months. If you are not committed to this, then don’t bother.
It is also imperative that you create a solid project budget that includes the cost of providing rewards, shipping costs, the platform’s commission and transaction fees and income tax on the money raised. These costs are in addition to the funds you hope to raise. When inexperienced entrepreneurs fail to include these expenses in the business plan, they experience failure and underfunding.
Preparation is the key to success. Crowdfunding is not a quick fix to your money problems. It is a strategic plan to build necessary funding in small increments from potential future customers.