So, you’ve got the drive to start up that new business that you’ve always wanted. You want to run things your way or you have a great idea that you’re sure will really take off, but how do you start? Where should you get the capital? Getting a small business loan may not be the best choice for you or your business. If you have bad credit or if you have a very innovative idea, it may be hard to get a loan; and that is why crowdfunding may be your answer.
Crowdfunding is when a project or venture is backed by raising many small amounts of money from a large number of people. It is usually done online through websites such as Kickstarter or Go Fund Me. Since 2013, an estimated 5 billion dollars have been raised through online crowdfunding sites. Kickstarter alone has raised an impressive 1.8 billion since 2009. However, not all projects on sites like Kickstarter are guaranteed to be successful. In fact, 3 out of 5 Kickstarter projects fail to launch and those odds can get worse with some crowdfunding sites having odds as low as 1 in 10 launching.
There are many reasons for this, but they can be boiled down to a few main categories. The first being, in order to be successful on a crowdfunding site, your project has to be marketable. Not only does it have to be marketable, it has to be sexy in that is has to be appealing and energetic. You want people to fall in love with your idea and you need them to think that your small business will work and the best way to do that is to make it as appealing as possible. Boring business ideas do not often make their goals on crowdfunding sites.
The second way to be successful on a crowdfunding website is to be willing to promote. The more people who know about your idea, the more likely you are to raise the money. In some cases, this means making a video; but in all cases it means being willing to wear a sign, hand out pamphlets, go on social media and talk about your small business. Promote, promote, promote. And once you have backers, ask them to promote your business too.
And that brings us to the final way to help ensure a successful crowdfunding experience: it is important that you have a lot of backers. Sure it would be nice to get a lump sum from one generous donator, but it is more realistic to go for a large number of smaller donations. This means that your business idea seems good to more people and that can translate into more customers once you get up and running.
“Crowdfunding or a Small-Business Loan: What’s Best for your Company” Yand, Cindy. Entreprener.com Aug. 8 2015.