October 18, 2014
Want to start your own business but don’t have the required funds? I bet you’ve already started looking at various funding options that can get you out of your rut. You’re also probably thinking of going the conventional way and approaching the bank for a loan. But have you considered other more modern and hi-tech options?
It’s no secret that most startups struggle to bring investors on board. However, with the emancipation of fund-raising practices such as crowdfunding, several small businesses and startups have been able to gain traction in less time.
For those new to this concept, Wikipedia defines crowdfunding as “the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the Internet.”
A lot of people, however, do not understand crowdfunding, which may result in the failure of such a campaign. There are many success stories too, and it can get you a hell of a lot of pull if you do it right.
Wondering how you’re going to manage that? We have some useful tips.
Don’t Try to Do Everything Yourself
Your crowdfunding campaign is going to be extremely demanding and you’ll need to be hands-on with it. So, if you think you’re going to manage running the entire show by yourself, think again. It is suggested you have a team of talented people around you. Pick people who are as committed to winning the game as you.
Among the various members in your team, consider having a core team which comprises a social media guru, a graphic designer, and a cameraman. Remember, all your team members will help you expand your network and reach.
Aside from that, reach out to sponsors, vendors, keynote speakers, and other influential people with whom you can build partnerships and/or alliances. Approach them well in advance with your cause and ask for their help in telling the public about it.
Let Others See Your Vision
If you do not let people in on your vision, how will they know what you need from them? How will they be convinced enough to back your project financially?
Most successful companies rake in the goods because they know how to tell their story in a way that attracts people and keeps them engaged.
Humans are largely emotional beings, who think from their heart rather than from their head. Your story should be able to appeal to people’s hearts.
Don’t Rush In
In order to ensure that you have a successful campaign, you will have to prepare for it. And preparation takes time. You will have to put in several weeks of researching and planning with respect to your budget, and the best possible option for raising the funds.
Do your homework well in the following areas:
- Set a budget, but be tight-fisted. Consider all your expenses including the taxes. Make it a point to set aside an additional 10% – 20% cushion for hidden/emergency expenses.
- Try to secure as much marketing and promotional material as possible before beginning the campaign. This will make things more hassle-free, and also raise the chances of generating awareness.
- To lend personality and to increase the appeal of your campaign, consider telling your story through an audio-visual medium. When you do make a video, however, make sure it is brief, easy-to-understand, and entertaining. Use wit and humor and your campaign is guaranteed to be rewarded.
Know Your Tools Well
There are several Web-based crowdfunding tools available, each with its own rules. Figure out the similarities and differences between them.
They usually differ in the types of campaigns they accept, their fees, and policies regarding the collection of money post the campaign, if it is unsuccessful.
Kickstarter and Indiegogo, for example, are two popular sites for crowdfunding campaigns, but both operate very differently on the above parameters.
Information on the rules of such websites is easily available in their FAQ sections.
Imagine yourself going to the supermarket to buy waffles. You scout through various brands and finally stumble upon the one that offers a free bottle of maple syrup with it. There’s a high chance you’ll choose this brand over others as it rewards you for paying for their product.
Now apply this logic to your campaign. Offer attractive rewards to lure in funders, and watch them put in money to get them. If you’re hosting an event, for example, the reward could be offering VIP seats or backstage passes to the attendees and sponsors.
The idea is to entice and appeal with your rewards.
Keep it Short
Do keep the length of your crowdfunding campaign short. About 30 – 45 days is considered a good timeframe – long enough to get good traction, and short enough that you don’t wear down.
Set a deadline as it creates a sense of urgency and activates people.
Constantly Communicate with Your Audience
Communicating with your audience regularly is crucial if you want to stay relevant and keep them hooked. Remember, out of sight could easily turn into out of mind. The Internet in general and social media platforms in particular can be of great help here, and so can words from journos and your fans.
Keep the communication flowing at every stage. Even after your campaign has started, keep your followers and sponsors apprised by adding weekly updates to it. Give them an option to share your campaign with their friends and family, so that your reach and awareness increase.
Don’t Give Up
Typically, fundraising tends to follow a pattern when it comes to getting the money. Most money comes in during the first and the last few weeks. So, if the flow of sponsors slows down mid-way, don’t start stressing over it. Use the slow period to prepare and gear up for a big, powerful push at the end.
Crowdfunding isn’t easy. It requires a lot of hard work and strategizing. While most people are able to meet their goals, some struggle with it too. However, by planning ahead, preparing adequately, and executing strategies the right way, you will surely increase your chances of success.
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