Questions that You Should Answer Before You Decide to Crowdfund Your Business
According to Expertise, around 90% of business owners believe in bank loans, despite the fact that banks have decreased the loan amounts that go to a small business.
Crowdfunding is a great option for raising funds. It is true that crowdfunding is probably one of the best ways in which you can raise money for your startup, project, or idea.
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However, it is something that does not work for everyone. A mixture of skill and luck, sense of good timing, PR, marketing, powerful momentum, and strong objectives are required to get the crowdfunding campaigns right. However, it is important to understand that crowdfunding isn’t for everyone and chances are that it is not going to be the ideal financing model for most of the businesses. Before you decide to invest your money, time, as well as resources to build out crowdfunding campaigns, it is going to be extremely sensible if you determine whether crowdfunding is going to be right or wrong for you.
In order to determine this, it is important that you ask yourself a few important questions to get a clear understanding.
It is important to understand what is differentiating your business from the existing competitors in the market or the alternatives that are there. Find out if you are making use of a brand that already exists or a personality, who already has a huge base of consumers and fans. If you are using an older brand, which your consumers can connect with, it is considered to be one of the most effective strategies.
2. Forms of crowdfunding
Ask yourself the appropriate crowdfunding form, which is going to work for you. Determine if you need to add people to the roster of investors. If you do, you can fish for the new investors on the equity crowdfunding platforms. Determine if you require a reward based crowdfunding like Indiegogo or Kickstarter. While both these paths are referred to as crowdfunding, the results that you are going to get can be completely different.
Find out the complete fee structure of a crowdfunding campaign. As soon as all the rewards, processing fees for your credit card, handling and shipping charges are paid out, you still have to pay a fee to the crowdfunding platform. Most of the crowdfunding campaigns are almost free but an entrepreneur can end in a great loss if he hasn’t budgeted in a proper manner. It is crucial to follow the crowdfunding budget planners. Entrepreneurs can go through www.libertylending.com if they have questions related to raising money for their business venture.
Ask yourself as to how well you are acquainted with the target audience and the present customers that you have. You need to have a proper idea about where and when they are hanging out, what are the things that excite them, and the ways in which you can attract them to your products or services. Crowdfunding is definitely an effective method of fundraising but most of the campaigns do not happen in a magical manner. They require marketing.
Ask yourself if you understand the professional and personal demands that the processes of running crowdfunding campaigns demand from the creators. Find out if you are completely prepared to give in all your effort for making the crowdfunding project successful.
6. The working of the crowdfunding platform
It is crucial to ask yourself as to how much effort you have to give and how much is the platform that you have selected giving you back for your fundraising. A number of crowdfunding platforms admit that they are extremely powerful. However, money is not going to come only because you have launched on a platform X or a platform Y. Different platforms will get involved in a different manner in the process of fundraising and the best thing that you can do is ask yourself as to how it is all going to work for you before you decide to launch.
7. Crowdfunding tools
Ask yourself if you have all the appropriate and ideal tools at your disposal so that you can be successful in your campaign. You also need to know if you can keep a track of all the rewards and understand who is getting what reward and at what time. You need to have a proper list of all the crowdfunding tools that are powerful, so that you can ensure that your focus is on the things that are important, thereby allowing the system to handle all the other important things.
You need to ask yourself if your team knows how they can manufacture a product as soon as the campaign of crowdfunding is over. Producing, and shipping crowdfunded products is not a trivial task and it is necessary to understand the budget requirements, procedures of shipping a product, and the timelines.
Before you decide to crowdfund your business, it is equally important to have a sound knowledge of all the benefits that it has.
Given below is a list of the important benefits that you should know about.
- Crowdfunding provides an access to a huge amount of capital. It is one of the best ways of funding a business venture and this can be done without accumulating debt or giving equity.
- Starting a company is undoubtedly challenging and risky but crowdfunding helps in hedging risks. It allows entrepreneurs to get a market validation and is also known to serve as the best possible learning experience for the young entrepreneurs.
- A proper crowdfunding campaign is a great manner of introducing the vision and mission of a business venture to the market in which it is going to operate.
- It is not easy to prove it to the investors that your business has received enough market validation but crowdfunding is helping in making this possible.
- Crowdfunding helps in introducing loyal customers to a business.
- It is not an easy task to apply for loans in a bank and it is also a painful process that a businessman goes through. Applying for crowdfunding is a cakewalk and is so much easier than the traditional processes.
Recommended Read: Are Blockchain and Crowdfunding the Future of Investing?
Check out the infographic below to make crowdfunding business tips more brief and simple.
Crowdfunding is extremely powerful and it is a great fundraising tool, which not only allows financing the entire project but also works in a great manner for building a fan base that supports the project.