Is Crowdfunding Right For Your Business?
5 Questions to Ask Before Starting A Campaign
Money doesn’t always come when you need it. Oftentimes funding your business means maxed out credit cards, business loans, or even liabilities that can continue weighing you down for years.
And that’s why some small businesses have started to turn to Crowdfunding.
The concept is simple: you sign up on a platform, announce your needs, and wait for the money to roll in. No more recurring loan payments that might cripple you in the coming years!
Sounds great, right? In reality, it’s a little more complicated. Success isn’t guaranteed, and there’s also a chance that your campaign might fail without the right strategies in place.
So, here are a few good questions that will help you decide whether Crowdfunding will be worth your energy and time:
Does your business have a cause?
Crowdfunding was originally designed for charities, non-profits, and creative projects. You need to have a cause that appeals to a community before you can raise your first dollar. A great example is MVMT watches. With the right brand positioning, one that deeply resonated with digital natives like millennials, they were able to raise an incredible sum that helped them become a success story.
Can you deliver rewards to your donors?
What comes next?
You are expected to deliver and shoulder the pressure of production, manufacturing, and shipping to a massive number of supporters, so is that something you're going to be able to fulfill? Make sure that you've planned for success, and that the money you're raising is sufficient to fulfill the promises of the campaign and keep the business running afterwards.
Do you have a solid marketing strategy in place?
You must get people talking about your campaign before, during, and after the launch. Once your campaign is up, marketing needs to be set to full throttle. Depending on your strategy, this can mean advertising spend or social media management costs. It will definitely take much more effort than signing loan documents.
Are you ready for tax payments?
Campaigns must be properly timed so you can prepare for related expenses. Crowdfunding is not exempt from taxes, so make sure you have consulted your attorney or accountant for best practices.
Are you ready to test the waters?
Market research is part of the planning process. Be sure to test the waters, identify your market, and properly assess their interest for your offering before investing your time and effort into crowdfunding.
Ready to take the plunge? If your answer is “yes” to all these questions, then crowdfunding could be a great opportunity for you. When done right, a successful crowdfunding campaign can make the difference between being a success story or yet-another failed business venture.
With the right guidance and advice, you can take this big step and transform the future of your business. If you'd like to learn more about business finance, and how to read financial statements and gain key insights from them, download our free eBook "Business Finance is Hard...but it doesn't have to be."