Trust The People: Crowdfunding Your Business Startup

Starting a business requires money. If you plan to start one, one of the first things you need to do is to focus on getting funds. The traditional method is to either get loans or to find some investors. But modern technology provides potential entrepreneurs with a new source: crowdfunding. Instead of depending on the resources of a single wealthy investor, you can turn to the masses and ask them to chip in. Here’s how it can work and how to make it work for you.

How It Works

The main idea behind crowdfunding is that you solicit money from potential donors. This can range from a single dollar to six-figure amounts. Anyone can give money, and all the money will go to the business. There are four approaches to it. One is to consider all the donor’s money as a full donation. This means that you don’t owe your donors anything. They gave it with no expectation of return. This is great for business upgrades, but not enough for a startup.

You will likely be choosing from the other three. One is to crowdfund loans, rewards, or equity. A loan should be simple to understand. Donors lend you the money, and they will expect their money back. You can crowdfund with the promise of rewards. This is how most crowdfunding projects go with donors spending money to earn rewards like finished products and more. These rewards are usually released long after the funding is done. Finally, you can crowdfund equity. Instead of actual cash and rewards, crowd funders are given a chance to own a part of the company. This can be complex so you’ll need some legal help for it.

You’ll need to choose one of these types of crowdfunding for your efforts. But to truly succeed, there are several things that you need to do.

Prepare For Everything

Before everything else, you need to lay down the foundations for your crowdfunding campaign. There are several things to do. One is to determine what is a realistic goal. Crowdfunding campaigns have a specific amount they aim for and nothing more. You have to start calculating how much you need. Additionally, it would be best if you prepared a proper business plan. Similar to how you attract a normal investor, you need to be able to present people with what your company is aiming to do, how it intends to profit, and more. You’ll also need to lay the groundwork for when you get the funds. It is easier to get things done when you only have to pay for it. This means looking for suppliers and more.

Have a Platform

HR management

An integral part of the crowdfunding process is choosing a platform to use. While you can do it yourself, you have a better chance of success if you have a third-party platform that accepts all the crowdfunding funds for you and releases it only when your campaign succeeds. Kickstarter is the face of crowdfunding, and it will likely be the best platform possible since it is the most recognizable. If you are looking for a loan, there is LendingClub. But that is more for existing businesses that need an additional infusion of funds.

Start a Massive PR Campaign

The main flaw of crowdfunding is that you need to make as much noise as possible. This is to raise the profile of your project. You have to start months ahead of your campaign starting. You need to make PR material and talk with marketing experts like an SEO consultant and others to find ways so that your crowdfunding campaign gets the attention it needs. Remember that only a small fraction of those who see your ads and website will invest. This means you’ll want to increase the number of people who know your campaign as much as possible. Flood social media and industry websites with content about your project. People need to know about what you are aiming for so that they can invest in your business.

Communicate With Backers

During the campaign itself and beyond, one helpful thing that you can do is to keep in touch with backers. The moment they become part of the program, you need to provide them with updates and more. Open yourself up to community questions and engage with them. Remember that the funds won’t release until the campaign is over, so you need to retain them. Additionally, even after the campaign ends, you need to keep them happy as your business gets off the ground.

Crowdfunding is an incredible method of getting the initial funds for your operation. Depending on the approach you take, you don’t have to worry about a greedy investor taking over your company. Additionally, it can potentially give you a built-in customer base. Think about crowdfunding as a serious option when you plan to launch your next startup.