28 Sep Crowdfunding: Is it a Viable Way to get Funding for Your Business?
Business plans of old—and many modern ones as well—possess detailed sections on how a company plans to get funding through traditional means. Think banks, credit unions and interested investors. However, more and more business plans have sections on crowdfunding, and some plans totally bypass traditional funding. Here’s the inside scoop on crowdfunding and why it may make sense for your business.
How crowdfunding works
In a nutshell, crowdfunding is using the Internet to reach masses of people in hopes of funding an endeavor. Even if each person contributes only a small amount of money, the sheer number of contributors makes a campaign successful. In a typical crowdfunding effort for an entrepreneur or business owner, you register with a crowdfunding site, build your project, and leverage social media and any marketing avenue available to you. Projects often offer incentives such as a free or discounted copy of the product-to-be. Crowdfunding requires work, make no mistake.
Running a successful campaign
The key to the success of your endeavor is to understand the reasons that people contribute to a project. They contribute because:
- They feel a connection to the cause.
- They like the rewards.
- They appreciate the design and presentation of a project.
Use video and infographics to add pizzazz to the project presentation. Stay accessible as much as possible; don’t plan to have much of a life while you have a live campaign.
Various uses of crowdfunding
People have used crowdfunding for such diverse purposes as funding a dog’s surgery and paying for a honeymoon. In recent years, however, as entrepreneurs, nonprofits and small businesses started using it, it has become much more reputable. Even established businesses take advantage of crowdfunding
You can use it in any stage of your business. One of the most common reasons to crowdfund is to get a project or expansion rolling, but businesses also use it to raise money for purchases and investments. Crowdfunding is also a great way to garner attention for your business and build or solidify loyalty among your supporters. It also allows you to see how high potential interest is in a product or service.
Reputable crowdfunding sites
While each crowdfunding site has a niche, here are a few of the top sites for you to explore.
- Kickstarter: Perhaps the most well known. You can’t use Kickstarter to fund businesses, but you can use it for product-related efforts. Your project must pass a curation process to get accepted.
- Indiegogo.com: If your funding effort passionately supports a cause, this could be the place to be.
- RocketHub: A good site if education is a main thrust of your project.
Last but not least, you don’t necessarily need to register with a site to crowdfund. Some businesses do it through their own websites. They pay fewer fees and retain more control over their project. One downside to that, however, is the possibility of less attention.
Have you gone the route of crowdfunding? How was your experience? Give us your take on the subject in the comments below.