Being your own boss may take a little crowdfunding to become a reality. Getty
Finding funding for your small business has never been easy. But it has gotten more interesting with the rise of crowdfunding—raising money by pitching your business idea, product, or venture to the masses via the internet.
Unlike applying for a traditional loan, when you crowdfund you don’t need to have an established business history, or excellent personal credit, or anything more than a dream. You don’t have to convince one bank or lender—if you can convince enough everyday people from around the world to donate or invest, you can fund successfully.
Plus, research shows that successful crowdfunding campaigns positively influence the ability of companies—particularly smaller ones with more modest funding goals—to attract additional capital in the future. Strong campaign performance also results in greater publicity and makes it easier to find employees and build partnerships.
If you choose to set up a crowdfunding campaign, don’t be blinded by the high-profile triumphs. Most campaigns fail to fully fund and depending on the platform, that could mean you’ll end up with nothing to show for your effort.
Before going live with a campaign, review the following checklist and make sure you’ve set yourself and your business up for success:
Pick the right crowdfunding platform
Not all crowdfunding platforms are alike or made equal. As an entrepreneur, you’ll have literally hundreds of platforms to choose from. The big names like Kickstarter and GoFundMe are well-known, but others like Fundly and SeedInvest have helped raise millions in funding as well.
Each platform has its own fees, guidelines, and target markets that may be more or less inclined to fund your idea. Craft platform-specific pitches that take into account your target audience, campaign goals, and preferred crowdfunding structure (rewards- or equity-based, for example).
Show your work
You can promise would-be investors just about anything, but will they believe you? Your pitch should include some sort of proof of concept—a physical product (if you have one). a prototype, or even a video sketching out the idea. Campaigns with visuals like photos and videos are more likely to fund, partially because you’re giving lenders a tangible idea of what they’re investing in.
Use an SEO writer to craft your pitch
You want your crowdfunding pitch to be concise and punchy—explaining the who, what, and why of your idea without getting bogged down in the weeds. But your pitch can serve another purpose as well: It can help your idea, and business, rank in Google search results.
If you’re familiar with search engine optimization and the tactics needed to turn your listing into a top result, you’re ahead of the curve. If not, considering enlisting a professional to artfully load your pitch up with keywords and phrases in your headline and text, to increase your visibility going forward.
Create a short but flashy video
If you’ve got the money for it, a video can be the difference between a good and great crowdfunding campaign. According to Indiegogo, campaigns with video pitches raise 114% more on average than those without.
Your video doesn’t have to be extremely professional: It should cover the basics; show your idea rather than tell it; and, like most things created for internet consumption, be short—five minutes or less.
Promise, and deliver, valuable rewards
If you go with a platform based on rewards-based crowdfunding, such as Kickstarter, you’ll typically have to give people something in return for their donation. Rewards have an obvious appeal—most people would prefer to receive something for their dollar than nothing. But there are other perks to this give-and-take: Rewards help donors feel involved in the creative process, building brand loyalty early, and they’ll feel invested emotionally in your success as well.
That being said, don’t deliver boring, rote rewards that fail to inspire donors. Creative rewards like early access, custom swag, unique artwork, and being written into or visibly featured in the product will attract attention. The gift certificates you’ve gotten for past birthdays but never used? Leave them out of this.
Tap your inner circle to invest right away
According to platform GoGetFunding, visitors stay on your page longer and are more likely to donate, once you’ve raised over 40% of your goal. Similar to “priming” the tip jar, seeing so much activity by other users encourages people to join in.
The best way to prime your campaign’s jar is to get your inner circle—friends, family, colleagues—to donate right as your page goes live. Nobody has to know the first donor was Mom. Get the ball rolling and momentum will take over.
Craft a day-to-day marketing plan
GoGetFunding also says that campaigns with a marketing plan with at least one daily action item raises three times as much as those without.
Each day, do something to increase the reach of your campaign. Post an update on your page, make a new Facebook post, or add another tier of possible rewards up induce donations. A campaign that lacks activity will likely also lack donations.
Prepare to push your campaign on all your channels
A crowdfunding campaign is a public pitch for support. Don’t be afraid to use every channel available to you to make the people in your life, and the people in their lives, and people who you don’t know at all, aware of your venture.
Use your personal social media channels to blast out the page and any updates; craft an email newsletter to keep donors and other people in your circle aware of the campaign’s progress, and create other pages such as a Medium blog or YouTube channel to increase visibility.
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Crowdfunding can be a good first step for a new business or an alternative funding avenue for an established business that isn’t getting the traditional financing options they want. It’s not, however, a free tool for unlimited funding—you’ll still need to devote hours of time and effort and even financial resources in crafting the best campaign possible.
And, just like with a traditional loan, the work doesn’t stop once you obtain your funds. At that point it’ll be on you to deliver the goods you promised, so get ready to work.