As a result of the Crowdfunding guide for small businesses are able to raise money in new and innovative ways.
Unlike in the past when investors and their capital acted as gatekeepers for business growth, today entrepreneurs can raise funds from their fellow citizens via crowdfunding. The growing popularity of crowdfunding has enabled many well-known businesses to raise the working capital they need to get started.
How do you run a successful Crowdfunding guide for small businesses campaign for your small business? What do you need to do afterward? Read on for our top tips…
How does crowdfunding work?
Fundraising through crowdfunding helps to launch new businesses and startups without the financial backing of an investor. In contrast to traditional venture capital, crowdfunding allows ordinary people to contribute to causes and businesses by contributing their money and time.
Crowdfunded projects are usually funded via online platforms, with people contributing a small amount each to a project. Crowdfunding startup investments can effectively be charitable, with investors looking for little or no future returns. You can also offer them in exchange for equity in a business or a share of business profits in the future.
What are the steps to launch a crowdfunding campaign?
The process of Crowdfunding guide for small businesses is more complex than just launching a campaign page and hoping for the best. Brewdog, Occulus, and Athenry, three of the most successful crowdfunding campaigns, have also organized comprehensive marketing, awareness, and PR campaigns to promote their businesses. These campaigns can start and end in a matter of days, if not hours, as is the case with most internet-based campaigns.
What crowdfunding platforms and websites are the best for small businesses?
There are a few high-profile crowdfunding platforms in the UK. The following platforms may be suitable for your business depending on the type of crowdfunding you need:
- at Patreon
- The Circle Up
- Website CrowdCube
Do’s and Don’ts of Crowdfunding
Following are some key dos and don’ts for your crowdfunding appeal, if you’re hoping to raise funds for your business through Crowdfunding guide for small businesses.
Make sure the platform you choose is suitable for your business.
Your tech start-up will not be successful if you attempt to raise funds through a charity platform. Prior to running a crowdfunding campaign on a platform where you know you can find your potential backers, you should take some essential steps to understand your potential backers. For independent creators, Kickstarter is the best choice; for tech entrepreneurs, Indiegogo is a good option; for personal or charitable causes, GoFundMe or Causes are your best choices.
Even though small business crowdfunding differs from traditional investment rounds, there are some important principles to keep in mind. In particular, you should be transparent when it comes to potential funders.
It is imperative that you are clear about what your fundraising goals are, what your money will be used for, and what investors will receive from their contributions. Since you can’t know the future, it’s okay if your plans change. In addition, Crowdfunding guide for small businesses makes you accountable to a wide range of potential investors, so you’ll need to be transparent and clear about how the investment will be used.
Intensive market research.
In almost every successful business, marketing plays a key role, and crowdfunding is no exception. Before you start thinking about crowd funders, you will need to think about ways to grow your base, boost your brand awareness, and attract some potential backers. When you put some time and resources into marketing your business, you’ll raise its profile and build some interest ready for the crowdfunding campaign.
Try not to be ambitious.
Crowdfunded small businesses and technology startups are launched every year, but only a few are successful. The majority of UK crowdfunds fail and although this is a large number, there is a chance your business could be among the 30 percent. This does mean, however, that your crowdfund should not be too ambitious. Avoid disappointing investors by being realistic about how much you could raise.
Don’t put all your eggs in one basket.
You might not be able to raise sufficient funding to get your business to where you want it to be even after a crowdfunding campaign that meets all your target funding amounts. Many businesses are turning to crowdfund to raise some much-needed cash, but you shouldn’t depend solely on crowdfunding. Take a look at what other fundraising options there are and whether it is necessary to cast a wide net.
Don’t underestimate the task.
You won’t avoid all the traditional fundraising responsibilities by Crowdfunding guide for small businesses. Your fund can be held accountable and responsible for its future direction and for what it is used for. Plan ahead and be prepared for any challenges that might arise.
Any business venture entails a certain level of risk. This isn’t necessarily a bad thing, but it does mean you need to be prepared financially to ride out the highs and lows of starting a business.
How should you proceed after your crowdfunding?
Having a successful crowdfunding campaign is only the first step toward starting a business – it won’t be enough to get your business going. Your momentum needs to be carried forward. Even though it might take you some time to get your business up and running, one of the first things you should do is reinvest some time and effort back into your funders.
Create a community around your backers; whether that means offering them exclusive updates, rewards, or incentives, make sure you don’t just take the money and run.
It’s also important to keep your eye on the long-term success of your project. You may not achieve your future goals with the Crowdfunding guide for small businesses alone, as described above. Focus on your business, your growth plans, and how you can raise more funds in the future.
There is always a level of risk associated with starting your own business. Thus, getting the right financial advice before you launch a crowdfunding campaign is so important.
If you work with an independent financial adviser (IFA), you will have peace of mind about your own finances regardless of what bumps in the road your business throws your way. Use Best Bizz to find an IFA that has the expertise you need.