By Uwe Dreissigacker
Are you a business owner looking for ways to finance your new business? You might be interested in crowdfunding your business idea to turn your dreams into reality.
Crowdfunding is a fairly simple way businesses and entrepreneurs can raise money and survive in the competitive market. In fact, it can be an amazingly inexpensive way of promoting a company’s products or services. It can also help you build a base of future customers.
However, while mobilizing, it’s important to keep in mind some dos and don’ts of successful crowdfunding campaigns.
Here, we’re going to provide a few tips on how you can get started crowdfunding your business idea and get things moving.
1. Decide Which Type of Crowdfunding Is Best for Your Business Idea
Before you set up a crowdfunding campaign, you need to think about which type of crowdfunding would be the most suitable for your business.
There are four types of crowdfunding campaigns:
- Reward Crowdfunding is the most common type of campaign and includes setting up a profile on a crowdfunding website. Here you’ll list an offer containing key information about your business, the project you’re trying to fund, and your funding goal.
In exchange for their financial donation, backers get a reward. This could take the form of a product, service or even just a thank you note. Some of the best platforms for reward crowdfunding include Kickstarter and Indiegogo.
- Equity Crowdfunding means that in return to their funding,your backers will receive ownership shares in your business.
Some of the best websites for equity crowdfunding include: AngelList and CircleUp.
- Debt Crowdfunding is a loan, in a nutshell. To do it, plenty of people loan you money which you have to pay back with interest in a predetermined time frame.
Some of the best websites for debt crowdfunding include LendingClub and Prosper.
- Donation Crowdfunding doesn’t require rewards or repayment, and due to its philanthropic nature, is one of the hardest crowdfunding methods out there.
It simply takes more time and effort to get donations when you’re not offering anything in return.
Nevertheless, some businesses experience lots of success using fundraiser platforms like GoFundMe.
2. Choose the Best Website for Your Crowdfunding Campaign
Once you’ve determined which crowdfunding method you want to implement, you need to decide what crowdfunding website you want to push your campaign on.
This step is crucial because it will set the basis for your campaign. That’s why you must invest time into researching every relevant online source to decide which platform will best fit your campaign’s needs.
Humans are natural story-tellers. We use stories to tap into our unconscious mind and inspire connection, conversation, and action.
Stories help us remember facts and ideas and serve as a bridge between people uniting them through common shared values.
When we look at the research, almost 95% of our purchasing decision is formed in our subconscious mind. That’s why creating a compelling brand story is one of the most potent tools while setting a crowdfunding campaign.
Ensure your potential funders know more about your product or service. They should also understand the idea behind your business as well as the passion that drives you. Doing it using video-pitch is an amazing way to get the message across.
4. Promote Your Campaign Outside of the Crowdfunding Website
Setting up a campaign on a crowdfunding website isn’t enough to get your voice heard.
There are plenty of ways you can engage people and take your business to the next level. These include the use of social media channels, reaching out to influencers and bloggers, and hosting events that drive interest and engagement.
Before you start a campaign make sure you research who are the people that can help you spread your story, as well as determine the right group of people most likely to invest in your idea and act based on that information.
5. Offer Good Rewards to Your Backers
If you decide to take a reward crowdfunding campaign you’ll have to offer interesting rewards to increase your chances of a successful campaign.
Sometimes potential backers will comment on your listing, which can give you good insights on what you can offer them in return for investment and improve the chances of making a successful crowdfunding campaign.
Furthermore, a good idea would be to scale your rewards based on the number of funds you get from your backers.And don’t forget to communicate with them on a regular basis to improve engagement and build a lasting relationship.
6. Practice What You Preach
Organizing a crowdfunding campaign is not a one-time event, but more an activity that will have a long-lasting impact on your business.
Building trust is one of the most important elements of business success, and you should ensure you follow through on everything you’ve promised during the campaign.
A Brief Recap
As we’ve said before, crowdfunding can be one of the easiest and most cost-effective ways your company can foster growth. However, you should remember that a way to success is not a fast process and that you’ll have to invest a lot of time and effort into promoting your idea.
Following these steps will put you on the right track. Now let’s get out there and put things in motion!