Crowdfunding is one of the emerging platforms that is increasingly becoming the top choice for small businesses with which to raise funds. Entrepreneurs and business owners often use online campaigns to ask people around the world for support. Learn more about the fundamentals of crowdfunding to understand why it works and how you can use it for your business.
Crowdfunding for Beginners.
Crowdfunding is generally used to fund a venture or a project by raising money with contributions from other people, usually through the Internet. It is often the solution for individuals or groups who do not qualify for loans or credit cards. It is also a great option for startup businesses who have yet to prove their profitability.
Convincing Strangers to Help.
A common misconception among people unfamiliar with crowdfunding is that it is an easy means to acquire funds. Far from it. While many crowdfunding sites have raised millions to help people, there are also attempts at crowdfunding that have failed. This is mainly due to the lack of information and understanding, and the absence of perceived usefulness by the crowd regarding the proposed venture or project.
So how can you make crowdfunding work for you?
First, you need to identify the key factors that will help you sell your business idea. These are:
- The type of product/service you have
- Its usefulness and/or value
- The amount of funding you need
When you are building interest for your venture, you need to understand what your message is. It must be clear, concise, easy to understand, and believable. If a potential supporter cannot believe your pitch, they will offer their support elsewhere.
Another key factor to consider is the baseline amount you require. You have to be able to decide how much funding will reasonably suffice. It is also not necessary to ask for the entire amount you need. You could, for example, ask for funding as a startup capital, or to fund the purchase of raw materials, or to buy equipment. This makes the amount easier to ask for and collect.
Understanding the Requirements of the Crowdfunding Site.
Popular crowdfunding sites typically charge a fee that ranges from 0% (YouCaring) to 5% (Kickstarter, Experiment, IndieGoGo, GoFundMe). This will be deducted from the total amount of fund you receive through the site.
There are also crowdfunding sites that are better options for funding startups compared to others. However, your success in these sites will also depend on the type of product/service you offer and at what phase of business you are at. Kickstarter, for example, is for businesses that focus on consumer products, while LendingClub is for businesses that have been operational for at least a year.
Do You Need Professional Help?
The process of crowdfunding can be very confusing and you might ask several questions that we commonly hear. At Ideazon, we understand your need to do the right thing the first time around. If you need professional guidance, we can help you navigate the often overwhelming waters of crowdfunding to ensure that you design, develop and implement a crowdfunding project that will successfully get your business off the ground.