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10 Things You Should Know about Crowdfunding to Start Your Business

10 Things You Should Know about Crowdfunding to Start Your Business

After yelling expletive after expletive because you stubbed your toe on a chair you failed to push under your desk before going to bed (because who knew you were going to leap from the blankets with the best idea you’ve ever had at 2AM?), you settle into said evil chair to validate said best idea ever.

Site after site, email after email, your idea has claws. It will work! YOU can do this!

Only… you can’t… because you have no money.

Your brain feels like it’s playing ping pong in your skull. Idea after idea about how to fund this Best Idea Ever. Finally, it dawns on you.

CROWDFUNDING!

YES! That’s it!

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Except, it’s not that easy. It’s not until you know more about crowdfunding, and you’ve panhandled to every person you know and haven’t met yet.

1. Crowdfunding can fail very easily

According to Crowdlifted, over 71,000 Kickstarter campaigns have failed as of January, 2014. IndieGogo campaigns fare far worse with a 91% failure rate, according to Crowdfund Insider.

Those are abysmally horrible numbers. Especially considering that of those 71,000 fails, over 51,000 fail to make it through the friends and family round. Add that all up and it’s a whole lot of zeroes.

Even start-ups like Simplifit, and their co-founder Kevin Packer, know that you can’t just ask for money. You have to know when to crowdfund and when to approach other resources. As a weight loss brand, they couldn’t just take to the streets to ask for cash to get their software funded. He also says creating a crowdfunding campaign is a huge effort and distracts from the actual building out of ideas. Lastly, Packer says crowdfunding best serves products that are unique and stand out quickly.

It’s clear that not ALL businesses are suited for crowdfunding. Let’s take a look at what you need to do before hitting the streets.

2. Make sure you know who you are serving

Businesses that are aiming to serve the greater good by producing a product or service that fills deep needs, fare the best when asking for money from strangers. Unless you’re a video game developer. Then you leave everyone in the dust. By in the dust, I mean you walk away with 65 million dollars. The next highest earner stands in shame with 18 million dollars (as reported by Wikipedia).

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Don’t post some self-serving campaign just because you need a website. Understand?

3. Presentation is everything

You’ve heard the phrase, “You eat with your eyes”, right? Well, it’s the same with your presentation. Throw up any old whatever-you-can and your earnings will suffer. Trust me.

Carefully consider your presentation because you  don’t want your prospective funders to be on the fence about how serious you are. They’ll not give you a dime if they don’t feel like they can trust you.

Invest in a quality video. If all you have access to is your iPhone, watch this vid. Follow their tips to create vivid images that pull people in (along with their donations).

4. The language you use matter a lot

No matter what you do, don’t say the wrong words. If you do, people who are considering donating, will cross your name off their list of charities. You have to know the people you want to appeal to, intimately. You have to say the things that make their hearts sit up and take notice. Because if you don’t? You’re lost… just like Gilligan.

Do the legwork to understand how your potential think. Use the language they use. Use the words that open their hearts.

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Saying “Invest in US” will never earn you anything. But saying, “You want to own the world, and we want to help you do it,” just might.

5. Create early interest

When you present your crowdfunding campaign, it creates credibility and speaks to that, “Oh, Sally’s backing this, so it must be valid” mentality. It’s also known as social proof. If you already have some backing from outside sources, let your prospective funders know. If people who have already invested in the public round are excited about your project, they’ll also be good candidates to share their good intentions with their inner circle and extended contacts; thereby extending your public reach even sooner.

6. Be prepared to present your business plan

Some platforms, like IndieGogo and MicroVentures, want to see some semblance of your business plan. You don’t need to have every detail mapped out for them, they just want the highlights. That said, it’s always great to have your actual business plan on hand so you can present it if asked. You can even elude to it in your video for your campaign, adding a little more “oomph” to your “street cred.”

7. Know which platform will serve you best

Crowdfunding has been an ever-evolving industry since its inception back in 1997 and it’s come a long way. GoFundMe.com has raised over 580 million dollars for personal fundraisers, making it a leader in the field. But, as a business, you might want to look to campaign backers through sites like Kickstarter or Crowdrise for your creative ventures.

Or maybe you just want to launch a t-shirt line? If so, check into TeeSpring.

Be aware, each has fees attached. Some as low as 5% and some as high as 10% (like TeeSpring).

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8. Layout a strategy for marketing

You’ve got a Facebook account, but your BFFs are only going to share your campaign once or twice before they move on to the latest cat video. You need a marketing plan that will allow you to reach far beyond your circles.

This is where intimately knowing the people whose hearts will be touched by your pleas for help comes into play. If you know them well, you know where to find them online and off.

  1. Create flyers to post in those real world spots.
  2. Create ads for Google and Facebook. You can even buy Twitter ads, too.
  3. Create eye-catching and heart-grabbing images to post on Pinterest using Canva and Pixabay.
  4. Don’t rely solely on Facebook ads. Use your blog to talk about what your campaign. This will generate interest in a more heartfelt fashion. More than once.
  5. Reach out to people via email, but be careful not to spam. Engage them in conversation first, then ask if they’d like to contribute. Even better, add something catchy (not sales-y) to your email signature on your phone and your desktop. This way, no matter where you’re sending from, you’re covered.

9. Influencers can be your friends

Reaching out to influencers during your campaign is a good idea. Let them know you’re raising money for this cause that their audience will truly benefit from. However, do NOT wait until said campaign starts to start conversations with said influencers. Bad, bad idea. Do it early.

Start warming those fires. Try and be seen by them long before you need help. Create genuine relationships and don’t be a beggar. No one wants to feel like they’ve been used.

10. Remember it’s hearts that power wallets

No matter what you do, don’t forget the cardinal rule of crowdfunding: It’s hearts that power wallets.

There’s a trifecta that you cannot ignore if you want people to tear open their wallets for you: Story, authenticity, and credibility. Bake these things into your campaign and you’ll pull people into it. Let them see the passion that powers the idea. This will power the business. Let them feel how much you’ll put into creating “Awesome” for them. Let them experience just how important this campaign really  is. There’s a good chance they will reciprocate with genuine excitement and willingness to give and share.

That’s how you create a successful crowdfunding campaign. And that’s how you’ll get your idea from notion to motion.

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Last Updated on August 20, 2019

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. And that’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways on how to set financial goals and then actually meet them with ease.

5 Steps to Set Financial Goals

Though setting financial goals might seem to be a daunting task but if one has the will and clarity of thought, it is rather easy. Try using these steps:

1. Be Clear About the Objectives

Any goal (let alone financial) without a clear objective is nothing more than a pipe dream. And this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore if you are saving today, then you should be crystal clear about what it is for. It could be anything like kid’s education, retirement, marriage, that dream vacation, fancy car etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives, however small they may be, that you foresee in the future and put a value to it.

2. Keep Them Realistic

It’s good to be an optimistic person but being a pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going out of the line will definitely hurt your chances of achieving them.

It’s important that you keep your goals realistic in nature for it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said – “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman”. And this quote sums up the best what inflation could do your financial goals.

Therefore account for inflation whenever you are putting a monetary value to a financial objective that is far away in the future.

For example, if one of your financial goal is your son’s college education, which is 15 years hence, then inflation would increase the monetary burden by more than 50% if inflation is mere 3%. So always account for inflation.

4. Short Term vs Long Term

Just like every calorie is not the same, the approach towards achieving every financial goal will not be the same. It is important to bifurcate goals in short term and long term.

As a rule of thumb, any financial goal, which is due in next 3 years should be termed as short term goal. Any longer duration goals are to be classified as long term goals. This bifurcation of goals into short term vs long term will help in choosing the right investment instrument to achieve them.

More on this later when we talk about how to achieve financial goals.

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5. To Each to His Own

The journey of setting financial goals is an individualistic affair i.e. your goals are your own goals and are determined by your want to achieve them. A lot of times we get on the bandwagon of goal setting only to realize later on that it was not meant for us.

It is important that your goals are actually your goals and not inspired by someone else. Take a hard look at this step at all the goals you’ve set for after this step, you will be on the way to achieve them.

By now, you would be ready with your financial goals, now it’s time to go all out and achieve them.

11 Ways to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a 2 step process –

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough; and invest those savings wisely so that they grow over a period of time to help you achieve goals. So let’s get down to ensuring healthy savings.

Ensuring Healthy Savings

Self realization is the best form of realisation and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your monthly expenses. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you would be surprised to see how small expenses add up to a sizeable amount.

Also categorize those expenses into different bucket so that you know which bucket is eating the most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pump up your savings rate.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classical mistake which almost everyone of us do. We pay ourselves last!

Ideally, this should be planned upside down. We should be paying ourselves first and then to the world i.e. we should be taking out the planned saving amount first and then manage all the expenses from the rest.

The best way to actually implement is to put the savings on automatic mode i.e. money flowing automatically into different financial instruments (for example – mutual funds, retirement corpus etc) every month.

Taking the automatic route will make us lose control of our money and hence will compel us to manage in what’s left with us thereby increasing the savings rate.

3. Make a Plan and Vow to Stick with It

Budgeting is the best to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be made.

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Nowadays, several money management apps and wallets can help you do this automatically. It’s easy and who knows, you may just end up doing what people fail to do.

At first, you may not be able to stick to your plans completely but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Rise Again Even If You Fall

Let’s be realistic. It’s not like the world will come to an end if you made one mistake. This isn’t called leniency but discipline.

If you fail to meet your budget for a month, don’t give up the entire effort just like that. Instead, start again.

Remember that flexible plans are the most realistic plans. So go forward and try to follow your financial goals as planned but if for some reason, the plan gets out of hand for you, do not give up on it just yet. This has a lot to do with your psychology rather than any material commitment.

All you have to do is to stay on the road and vow to stay on it, no matter how much you fall down.

5. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make Savings a habit rather than a goal. While it might seem to be counter intuitive to many but there are some deft ways of doing it. For example:

Always eat out (if at all) during weekdays rather than weekends. Usually weekends are expensive. Make it a habit and you would in turn be saving a great deal.

If you are travelling buff, try to travel during off season. Your outlay will be much less.

If you go out for shopping, always look out for coupons and see where can you get the best deal.

So the key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice which will be harder to sustain over a period of time.

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6. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission. And it would be rather easy to lose the grip over your discipline.

Therefore in order to stay the course, it is advisable that you keep yourself surrounded with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

7. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

So if you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

Use this journal to write down all essential points such as your short term, mid term and long term goals, your current sources of income, your regular expenses which you are aware of and any committed expenses which are of recurring nature.

When you have a written commitment on paper, you are going to feel more energised to follow the plan and stick to it. Moreover, it is going to be a lot more easier for you to follow you and track your progress.

At this point, you should be ready with your financial goals and would be doing brilliantly with savings; now it’s time to talk about the big daddy – Investments.

Making Smart Investments

Savings by themselves don’t take anyone too far. However savings when invested wisely can do wonders and we are at that stage where we will talk about making smart investments.

8. Consult a Financial Advisor

Investments doesn’t come naturally to most of us therefore rather than dabbling with it ourselves, it is wise to consult a financial advisor.

Talk to him/her about your financial goals and savings and then seek advice for the best investment instruments to achieve your goals.

9. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about them.

Just like “no one is born a criminal”, no investment instrument is bad or good. It is the application of that instrument that makes all the difference.

Do you remember we talked about bifurcating financial goals in short term and long term?

It is here where that classification will help.

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So as a general rule, for all your short term financial goals, choose an investment instrument that has debt nature for example fixed deposits, debt mutual funds etc. The reason for going for debt instruments is that chances of capital loss is less as compared to equity instruments.

10. Compounding Is the Eighth Wonder

Einstein once remarked about compounding,

Compound Interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.

So make friends with this wonder kid. And sooner you become friends with it, quicker you will reach closer to your financial goals.

Start investing early so that time is on your side to help you bear the fruits of compounding.

11. Measure, Measure, Measure

All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments; taking stock of how our investments are doing.

If there is one single step where everything (so far) can go wrong, it is at this step – Measuring the Progress.

If we don’t measure the progress timely, then we would be shooting in the dark. We wouldn’t know if our saving rate is appropriate or not; whether financial advisor is doing a decent job; whether we are moving closer to our target or not.

Do measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

The Bottom Line

This completes the list of tips for you to set financial goals and actually achieve them with not so great difficulty.

As you can see, all it requires is discipline. But guess that’s the most difficult part!

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Featured photo credit: rawpixel via unsplash.com

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