Even the greatest business idea is likely to go nowhere without funding. Crowdfunding can help you raise business capital from online donors/investors on a variety of modern platforms. Crowdfunding on sites like Kickstarter requires careful planning, however, partly because it is so public.
Watch for these hurdles that make crowdfunding difficult–and heed the tips to attract individual crowdfunders (investors) to your business idea or product. Challenges include:
- Generating interest: Begin attracting fans and supporters as early as possible–even before you launch your crowdfunding effort if possible. Can you get on a local newscast or be the subject of an article in the local paper discussing your business plans? This type of marketing buzz can help you get more eyes on your crowdfunding website page—and help you earn more investment.
- Establishing trust: You’ll need to share information about your proposed business on your chosen crowdfunding website. You need to show why the idea has a great chance of success so that investors feel confident in your business success. Showcase your expertise in the industry you’ll be operating in, and share your passion about your product or company goal.
- Setting realistic goals: Manage potential investors’ expectations by setting goals you can deliver on. As you achieve milestones toward your funding goal (and make progress in your product design, manufacturing, etc.) report on these details to your investors. This will show that their dollars have gone to a winning idea and let investors feel part of your story.
- Keeping investors happy: Reporting on your progress, and celebrating goals met, is one way to get and keep your investors on your side. Another popular way to do this is by offering the early investors a free product, one of the first off the assembly line, so to speak. Investors attracted to crowdfunding tend to be interested in new ideas and products and enjoy being early adopters. If you cannot offer a free item, at least offer a deep discount. If your product is truly innovative and solves a problem many people share, you can keep investors/supporters happy—and their word of mouth can help sell your product as it becomes a reality.
- Protecting yourself: Make sure no one can steal your business idea or product plan and run with it before you have the chance to get started. You’ll need to be somewhat transparent to attract investors via crowdfunding—but don’t let your information-sharing backfire. Get legal advice which might include trademarking intellectual property or getting patent(s) pending, before you reveal your plans.
With all its challenges, crowdfunding is labor-intensive and certainly not right for every entrepreneur. Luckily there are other options to gain funding for your business.
Learn about business funding options without the complexity of crowdfunding! Contact Coastal Commercial Lending today.