Starting or growing a business can be exciting yet challenging. From ideas running rampant through your head to making it a reality is a long highway. There is so much to do, so much to investigate. In essence, we all know the bottom line will be how we pay for it all. Start-up costs can catch us off guard as we forget the tiny details that eat up our budget and therefore have to find other ways to move forward.
Crowdfunding is a great alternative and has changed the way many business start-ups fund their projects. Crowdfunding has tripled in the last few years and entrepreneurs use this type of funding for proof of concept or early idea validation.
According to Forbes, the key to success, no matter where you seek funding, is directly linked to the amount of work you put into your idea – and that happens long before you launch your campaign. Contributor Lawton Ursrey states, “there are three must haves in your crowdfunding strategy”.
- Perfect your message.
The most important aspect of explaining your product isn’t around the benefits, it’s around the problem it solves. Start with the problem, explain your solution and then verify the market size in your pitch to frame the situation for investors.
- Get clear on how much you need.
More money is always better, right? Not when it comes to crowdfunding. Asking for too much can leave you disappointed, and limit your future funding options. Don’t ask for everything at once. Focus your crowdfunding requests on specific parts of your business or certain phases of development. Instead of shooting too high, break down your funding into phases and establish a goal that makes sense within each phase.
- Skip the cold start.
Nobody wants to be the first to jump in the water. As with traditional funding, the psychology of things is a factor in producing the desired outcome – getting funded. Increase your chances on crowdfunding by starting out with some initial investment possibly assembling a starter crowd to draw attention to your pitch and make investors more interested.
Keep in mind that once the crowdfunding round is over – it’s really just the beginning. If things didn’t go as planned then find out why. Analyze the feedback and then adjust your goals if need be. If you had a successful round of funding, maintain a relationship with your investors and show your gratitude. Regardless of how much a person has invested, they may be willing to donate more during your second round.
Give people something to believe in, and they’ll be more likely to invest.