Crowdfunding is an excellent way to fund your small business. There are a number of different crowdfunding platforms to choose from, and it is becoming much more common to use this type of funding to get your business started. The money may come from reward, debt, equity, or donations and the technological world that we live in, it’s easy to collect funds from many people online.
Crowdfunding goes far beyond simply obtaining the money to get your business started, but it brings about awareness as well. It is a great way to gain new customers and to network with other like-minded individuals.
How it All Works
In order to utilize the potential of crowdfunding, you will simply interact with fundraisers and other entrepreneurs online, and you will make pledges. Fundraisers pay a small fee by these crowdfunding “platforms” and only if the campaign has been a success.
Many Different Types of Crowdfunding
There are three main types of crowdfunding options. There is equity, peer-to-peer, and rewards crowdfunding. With peer-to-peer lending, a few people will lend money that is expected to be paid back but with interest. It is very similar to how it is done at the bank but rather than borrowing from one institution you are borrowing money from a number of investors.
With equity crowdfunding, investors get a return for their investments when a stake sells. It is similar to the way that stock is bought and sold on a stock exchange. Rewards-based crowdfunding includes donations from individuals. These individuals gain non-financial rewards for their investment.
There are many other types of crowdfunding, and the opportunities to start your business are seemingly limitless. As long as you have the drive to be your own boss, you will have the means to do it somewhere. You simply need to tap into a source of funding to get your idea off the ground and to become a successful entrepreneur.
How to Go About Crowdfunding
If you need to get funding for your startup business, all you need to do is access a crowdfunding website so that you can get connected with other entrepreneurs and investors. Crowdfunding is the best small business loans but you will want to “sell” your idea and to convince people that investing in your business or product would be a smart business s move.
You will also want to set a deadline in which you want to have all the necessary funds raised. There will be many other entrepreneurs pitching their ideas as well so you will want to stand out and to make it impossible for investors to not fund your business. When people fund your business, they will benefit if you are successful.
This is also where you need to show people that you have a plan in mind and that you will put their money to good use. This will help to build trust and to also give yourself some direction when you finally get the money that you need to get your business started.
Kickstarter is one example of a crowdfunding platform and is a very popular one. As with most crowdfunding platforms, you will present your pitch to potential patrons of your business. This is also where you will specify why they should invest in your business and what they will get if they do. IndieGoGo is another crowdfunding platform that is very similar to Kickstarter.
Set Yourself Up for Success
When you are trying to build a successful business you will want to set yourself for success so that all of your efforts will not be in vain. Different crowdfunding sites offer different things, so you want to start by choosing the best one for your needs and specific skills.
Kickstarter and IndieGoGo are geared more for the creative type, which ProFounder is more “traditional.” Non-profit companies also have their own type of crowdfunding sites such as FirstGiving and AppBackr is geared for the mobile app niche.
Find Out Who Your Target Audience is
You need to figure out who your primary customers will be so you can cater to them. You wouldn’t try to sell cat toys to someone who doesn’t have a cat, and you wouldn’t want to present your business to a market they wouldn’t be interested in or have a need for your particular product or service. You would be setting yourself up for failure.
A Few More Tips
It’s best to break up your ultimate goal into bite-sized pieces. For example, instead of asking for $200,000 all at once simply start off asking for $10,000 for say that equipment you need for production. Create rewards that patrons want, and don’t forget to credit those who have supported your cause where credit is due.