One of the most challenging aspects of getting an enterprise off the ground is funding. You can attempt to court investors and venture capitalists, but if you're new to entrepreneurship, the odds of being able to secure funding through these channels is pretty slim.
One of the best options available to you is crowdfunding. You can launch a crowdfunding campaign to ask for the funding you require, and validate your idea in the process. Make no mistake - crowdfunding campaigns take a significant amount of work, but if you're serious about getting into business, then you should be willing to put in the time and energy necessary to promote your project.
Here's a few tips to consider when starting a crowdfunding campaign:
Tip #1: Be Prepared to Fail
This might seem like a negative point to start with, but not reaching your fundraising goals can be a good thing in the beginning.
According to Kickstarter, less than 40% of approved campaigns get funded. You can learn from your initial failures: what to do to improve, or whether you should move on to another financing option. Your first run at crowdfunding can provide real-time data and feedback from your backers or visitors. If you ask for feedback, those who chose not to donate can give you great insight for your second try.
Tip #2: Longer Isn’t Always Better
It might seem like common sense--the longer you keep a crowdfunding campaign going, the more successful it will be. However, this isn’t the case on bigger platforms like Kickstarter and GoFundMe. Data shows that longer campaigns are less likely to reach their goals, and the highest percentage of donations come in the first week of a campaign.
Setting your campaign for 30-45 days will offset any drop or lull in donations and raise funds faster. It also presents the benefit of a sense of urgency--your donors might feel a higher drive to donate when there isn’t more time to deliberate.
Tip #3: Set Realistic Goals
Before you start any crowdfunding campaign, you need to do your research. How much do you actually need to get started, and how much of that capital is coming from other sources? Find out the true cost of your small business before starting a campaign, and you’ll be able to set attainable goals for your project.
Tip #4: Choose the Right Platform
You’ve probably heard of Kickstarter, but many other crowdfunding sites have joined the marketplace. It’s important to explore your options (listed below!) because they have different audiences. Kickstarter and Crowdrise are the top contenders for businesses, physical items or creative projects, whereas sites like GoFundMe or Indiegogo tend to skew towards personal fundraising.
Top Ten Crowdfunding Sites of 2016
Crowdfunding can be a great alternative or even supplement to small business loans or investor capital. Keep in mind that research is key in starting a crowdfunding campaign, so make sure to explore our top ten list before getting started!