Startup entrepreneurs often seek funding before launching a business or putting their product or service on the market. Rather than looking for traditional investors, people are now turning to crowdfunding to gather public contributions. A crowdfunding campaign is a popular strategy used by startups and new businesses today not just to raise funds but also to gain exposure. Thanks to this strategy, startups can get donations from different sponsors to fund the development of their products and services.
Learning more about crowdfunding campaigns is vital for any organization to leverage this opportunity to raise the necessary funds for a successful launch. Remember, in order to successfully do so, you need to plan for months of hard work before the launch. You need to effectively capture the attention of a large crowd of potential donors and convince them that your project is worth their money and time. With crowdfunding, you are essentially relying on people willing to donate funds for your business, so to reach this crowd, you need to be well-equipped with a strong strategy.
In this article, we take you through a simple guide to setting up your own crowdfunding campaign.
Define Your Goals
As a business owner, you must evaluate how crowdfunding can help raise money to pivot your business to the next level. There are some things to remember when setting a crowdfunding goal for a business.
Firstly, your goal should be a realistic one that you can actually achieve. Secondly, you have to consider why you need the money. You must be specific about the ways you plan on using the funds. This way, your potential donors also understand where their money is going and why they should support your business. Thirdly, think about the level of support you can get from donors. For example, raising funds for a cause tied closely to people’s emotions makes you more likely to get more donations.
Tell a Compelling Story
The defining factor of a successful crowdfunding campaign lies in creating a great story – which is more than just business. Instead, it should tell people why you started it and what your company stands for. Your story should be inspiring and compelling enough to get people to want to invest!
Have a Realistic Funding Target & Budget
Calculate the minimum amount of time needed to get your project off the ground and ensure that this covers the costs of materials, manufacturing, shipping, etc. This allows you to gain an idea of the finances you require. Asking for too little or too much can spell disaster for your campaign, so make sure to land on the right number. Certain crowdfunding platforms charge a percentage of the money raised, while others charge a flat rate, so you should keep that in mind as well.
Select A Crowdfunding Platform
Besides the fee structure of the crowdfunding website, you will also have to think about your funding model, your target audience, and the type of project you plan on executing.
There are many crowdfunding platforms, and each has its pros and cons. The three most popular options are GoFundMe, Kickstarter, and Indiegogo. Regarding creative and innovative projects, Kickstarter tops the list of choice. Indiegogo is second to it in terms of popularity but rates higher in raising funds for a business venture. GoFundMe, on the other hand, is perfect for personal fundraising projects.
Build an Engaged Community
With an engaged community, you can get better support for your campaign and achieve your fundraising goals. Start with your existing network, which includes family, friends, and colleagues. You can also leverage social media to share updates about your campaign and anything your target audience might be interested in.
Moreover, you can utilize online groups and forums focusing on your niche – whatever it is, you’re sure to find a like-minded community online! You can join these communities to build relationships and gather potential supporters. It is also an excellent way to gather feedback and ask for help to help make your business better. Another great way of making connections is by attending industry events, trade shows, conferences, and meet ups. To take it up a notch, you can also host your own events to generate buzz for your business.
Have a Strong Marketing Plan
Your ability to collect funds will rely heavily on your marketing efforts. Here are some helpful tips for developing a successful marketing plan:
- Kick start your marketing plan at least a month in advance so you have enough time to gather momentum and generate interest for your campaign.
- Create social media accounts for your business and promote your campaign on all your channels.
- Have a compelling campaign where you introduce yourself and your team.
- Talk about your business and crowdfunding goals to convince your audience to invest.
- Use email marketing to approach potential donors who may not be active on social media.
Communicate Honesty & Effectively
While you maintain regular social media updates, don’t forget to communicate with your backers on the campaign platform as well. When people have contributed their money, it is essential that you keep them in the loop by sharing announcements, updates, milestones, and progress. Take the time to reply to comments, answer questions, thank donors, and share personal messages from the team. This will make your supporters feel valued and encourage them to share it among their peers.
Crowdfunding is an excellent solution for startup funding for a small business. Since most startups often don’t have the revenue to develop their business, crowdfunding provides secure funding in exchange for goods or services promised to the people who supported your campaign.
However, crowdfunding is a lot of hard work, and it takes a long time to see results. Moreover, it doesn’t always succeed. For context, as of January 2022, only 39% of Kickstarter campaigns were successful. However, that does not mean you are destined to fail. Nearly 80% of projects that raised over 20% of their goals were funded successfully. This makes it all the more important to carefully study crowdfunding statistics and strategies as part of your research plan.
At the end of the day, it all boils down to effectively planning, researching, and marketing your crowdfunding campaign. If you utilize the steps mentioned above in curating an appealing campaign, you can get the funds you need to take your business to the next level.