Advertising
Advertising

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!

Advertising

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).

Advertising

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.

Advertising

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).

Advertising

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.

More by this author

10 Things You Should Know about Crowdfunding to Start Your Business 10 Inspirational Life Lessons From Single Mom Entrepreneurs 20 Common Work Mistakes You May Have Been Making Every Day 12 Interesting Pictures Showing The Differences Between Copywriters And Art Directors 15 Most-Hated Types of Instagram Pictures

Trending in Money

1 How to Nix Your Credit Card Debt in Less Than 3 Years 2 Top 5 Spending Tracker Apps to Manage Your Budget Smart in 2019 3 How to Use Credit Cards While Staying Out of Debt 4 How to Use Debt Snowball to Get out from a Financial Avalanche 5 How Personal Finance Software Helps You Get More Out of Your Money

Read Next

Advertising
Advertising
Advertising

Last Updated on April 3, 2019

How to Nix Your Credit Card Debt in Less Than 3 Years

How to Nix Your Credit Card Debt in Less Than 3 Years

Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

Hint: there are ways that are easier than you think.

1. Consider Consolidating Multiple Credit Cards If Possible

This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

Advertising

Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

2. Try to Pay the Full Balance You Spent Each Month at the Very Least

You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

3. Pay Extra When You Can – Every Small Amount Counts

This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

Advertising

It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

4. Create a Plan on How to Pay Extra

Back to the main point, having this plan is giving you one less thing to think about.

This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

5. Cut out Costs for Services You Do Not Use

If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

Advertising

6. Get Aggressive About It

Consider these points:

Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

7. Reevaluate Your Progress at Set Intervals

Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

Advertising

Finally (and most importantly)…

8. Keep Trying

Do not get discouraged. Pushing it off will make it worse. Just keep trying.

Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

Start Knocking out Your Debt Today

The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

More Resources About Better Money Management

Featured photo credit: Pexels via pexels.com

Read Next