Every new entrepreneur or small business is more than likely to face a financial crisis. It seems to be even worse when you feel like you have a million-dollar idea that could make it big in the world, but you do not seem to have enough finances to support its production. The entire process of transforming an idea into reality is an immensely exciting yet intensely stressful journey.
In this age of modern living, however, there are multiple different ways to obtain finance for your new startup. Currently, the most popular amongst these is crowdfunding which could help transform your business entirely. Through comprehensive research, in-depth knowledge and proper planning, crowdfunding can become the tool that your business needs to succeed in this competitive market.
However, before you launch a crowdfunding campaign, it is essential to keep a few things in mind:
1. Keep Realistic Expectations
With a platform as unpredictable as crowdfunding, it is very easy to get carried away with your goals. When you start a new business, it is obvious that you would need lots of financing to survive. However, trying to receive all that money through crowdfunding may be an irrational decision on your end. Unless you get really lucky or your project idea goes viral, do not expect to receive totals that would last you for years in the end. The best way to begin a crowdfunding campaign is by doing some calculations for yourself first and setting all your targets and goals accordingly.
2. Research Your Target Market
Simply put, not every product is suitable for crowdfunding. Most products that are successfully funded through this platform are those that are not in immediate demand. If you have investors that expect to receive their profits instantly or potential customers needing the product immediately, crowdfunding may not be the place for you. Before launching a crowdfunding campaign, make sure that you research the trends and demands of your potential customers and determine whether using this platform is appropriate for your business or not.
3. Attract Backers Towards Your Product
Since your crowdfunding page eventually becomes your main website through which you operate, it is vital that you spend ample time on the page design and backstory. Each one of your investors would want to know more regarding your product and the rationale behind it, and the only method of doing so is directly through you. An effective way of attracting people towards your campaign is by filming aesthetic videos, taking convincing product shots and be honest about your idea and story. Spending almost three months on this entire design process is recommended before stepping into the launch of your campaign. By doing this, you will not only appeal to investors but also attract potential customers who will then become your fanbase and promote your product once it has launched.
4. Consider All Your Social Capital
To make sure that your crowdfunding campaign is successful, you will need all the networks that you have created throughout your life. You will have to reach deep into your networks and persuade everyone to support you in achieving your funding target. This process would involve sending emails months before the campaign launches, sending text messages the day before it launches, making calls on the day of its launch and even throwing a launch party to encourage your entire social circle to share the campaign further. The rationale behind doing this is to ensure that you achieve almost 40% of your funding goal within the first 24-48 hours for the crowdfunding platform to rank your campaign higher and reach more people eventually.
5. Choose the Right Platform
Raising money for your business through crowdfunding has never been easier. Reports claim that there are over 1000 active crowdfunding platforms worldwide and the booming industry is continuously on the rise. Since there are so many options to choose from, business owners may become confused in their choice of platform. The most important things to consider when choosing between crowdfunding platforms include deciding whether you want to sell equity, how long you want your campaign running for and what your target amount is.
Crowdfunding has helped launch many startups and projects to success. Will you be the next one? The answer will depend on your ability to research, plan ahead, and market properly to a large extent.
In the end, those who are able to balance their passion with due caution have the best chance of seeing their projects through.