As no doubt you learnt when you started your business, formal investment is very difficult to get.
Crowdfunding and its emergence (the process of raising capital for a new venture from a large audience typically through the internet) has produced a whole new pathway to business growth.
Usually, crowdfunding works by drawing on small contributions from a large number of people to fund entrepreneurial ventures.
Crowdfunding is often confused with crowdsourcing but the two are not the same. Crowdfunding focuses on raising capital for new ventures or business growth within existing businesses.
Whereas Crowdsourcing involves using the internet to attract, aggregate and manage inexpensive or even free labour from enthusiastic customers and like-minded people.
Therefore Crowdfunding is a resource for money and Crowdsourcing is a resource for talent and labour. Crowdsourcing is an excellent way to gain knowledge, talent and information from a relatively large pool. These groups will be found on crowdsourcing websites.
As most businesses will be considering Crowdfunding as a way of facilitating growth we have put together a list of top tips or a guide to successful crowdfunding.
Crowdfunding may seem like a temptingly easy way to get your hands on additional funds for your business growth, however, the success of each campaign is all down to the necessary preparation.
- Make sure your product or service solves a real problem.
- Test and refine your idea.
- Be prepared – this includes the delivery of the new product or service.
- Seek and Accept advice
- Get your campaign started (self-promote)
- Money matters – be specific and ask people you know first
- Focus on the pitch – the video pitch is everything.
- Commit to your campaign.
There are many benefits to crowdfunding, not only does it provide you with the money to grow your business it also provides you with an idea of the level of enthusiasm and interest in your growth area before you launch it. Crowdfunding also enables you to build early relationships with customers have a keen interest in your product or service and will most likely purchase it when it is launched.
Another and perhaps the biggest advantage of both crowdfunding and crowdsourcing is that there are lots of different options to choose from, and because of this just because someone has backed you it doesn’t mean you have to give away ownership or an equity stake in your business.
Crowdfunding and Crowdsourcing are interesting and fun processes when looking to build your business, they are excellent ways for you to make new contacts across the world, build your brand, attract customers, raise awareness for your products or services and create a buzz before those products or services even hit the market. Do not be fooled into thinking either Crowdfunding or Crowdsourcing are a quick and easy process, by exposing your business to the world you must be ready for the level of scrutiny that will come along with that, which is why it is so important to be prepared, planned and ready to deal with the process.
Gather as much support as you can before you launch from your family and friends not just to invest but to help you promote and spread the word.
Good Luck, the excitement starts here.