You’ve decided business crowdfunding is the way to go but what now? Let me help you make the right decisions when it comes to crowdfunding for your project.
The Key Steps to Successful Business Crowdfunding
In a previous blog we discussed the questions business owners need to ask themselves to determine if they are viable candidates for crowdfunding.
Now that you’ve decided you are a candidate for crowdfunding you need to make the following decisions to get your crowdfunding proposal online.
Choosing the Best Crowdfunding Sites and Platforms
- There are 100+ to choose from. What site is most appropriate for your project? Which site provides you the highest traffic/most social media contacts? Do the necessary research to choose well.
Funding for Your Project: How Much Money to Ask for?
- Too high and you risk losing people, however you want to ask for enough funding to make a difference in your business.
Flexible vs. Fixed Funding
- The difference is explained well on the CF site Indiegogo. However, Kickstarter, still one of the most heavily used CF platforms, doesn’t offer the flexible funding option.
- How long do you want to be on the site raising funds (usually 30-120 days)? Think carefully about this. From my interviews with businesses owners who used crowdfunding, longer is not necessarily better. CF takes a lot of your time. How much time can you afford?
What Perk/Rewards to Offer
- This is not equity financing. People contribute to your project because they like your idea. But they will want a perk or reward in return. And if the rewards are seen as really cool it might entice contributors to give more. Keep in mind the cost of each reward, including postage. You don’t want to lose money sending out rewards.
- They can start as low as $5 or $10. You’re hoping for volume here, so you might offer special mention on your website plus regular updates on your progress. This won’t cost you anything and may be seen as cool by contributors. Contribution levels can also be $1,000 and higher. These people need to get more recognition – something they perceive as worth their contribution. Brainstorm about this. Fancy lunch with the founders? Private tour of the plant? First screening of your movie?
What Must Get Done Before Launch
- Many things. But certainly draft a well-thought-out personal email to ALL your friends, relatives, colleagues, asking them to support your crowdfunding attempt. Then (humbly) ask them to forward your email to their friends, family and colleagues. The CF site will pull in traffic, but you must be proactive and push traffic to the site during your funding period. Remember, the clock is ticking – have this email ready to send on the day you go live.
Yes, lots of work. But the benefits and payoff can also be great. I’ll discuss that in my next blog.