Money, or rather the lack of it, is the number one reason why many brilliant business ideas remain just that. It takes lots of financial risks and efforts to start and run a successful business, even a small, home-based one, and some potential entrepreneurs simply cannot afford them. Between mortgage payments, bills and college funds for the children, there is simply not enough money left to make the idea happen and create the product or service they envision.
This being such a widespread problem all over the world, solutions started to appear. One of these solutions is called crowdfunding. What is crowdfunding? Basically, you present your business idea – your product idea, more precisely – and ask people to invest in your idea and receive the product (either for free or at a very significant discount) when your business is launched.
How Does Crowdfunding Work?
“Ask people I don’t know to give me money? Who in their right minds would do that?” Actually, a lot of people do it, and many start-ups were successfully launched using crowdfunding. The main reason why this system works and is trusted by people is that the crowdfunding platform owners are the ones actually handling the incoming donations and only give it to the entrepreneur when the entire requested amount is collected. Otherwise, everyone gets their donations back.
At the present, there are several reputable crowdfunding platforms available and they have proven by enforcing strict transparency policies that they can handle such a delicate service. Many of the owners of these platforms are former fundraisers and stakeholders in non-profit organizations, so they really know how to operate this system.
So, how can you grow your business with crowdfunding?
1. Search for the Adequate Platform
As we stated before, at the present there are several reputable crowdfunding platforms from which you can choose where to run your fund collection campaign. These are:
⦁ Kickstarter
⦁ GoFundMe
⦁ Indiegogo
⦁ Crowdfunder
When you select a platform, you should look for several aspects such as:
⦁ Adequacy to your crowdfunding campaign – some platforms (such as GoFundMe) are frequently used by individuals asking for donations to help with medical bills or other similar situations; there are many campaigns and yours has all the chances to go unnoticed;
⦁ Support – how much support do you get from the platform administrators? Do they offer you the tools you need to create and manage your campaign and give you technical support?
⦁ Analytics – how detailed is the analytics panel where you can monitor the progress of your campaign?
⦁ Funds handling – what is the precise policy of the platform on holding the funds and transferring them to you?
2. Prepare a Detailed Business Plan and Product Presentation
Remember that you are about to ask complete strangers to invest in your business idea and your product. They don’t know you, they don’t have any idea if you are a skilled and honest entrepreneur or are trying to pull a scam on them. This is why you should be very open about your business idea, be as explicit as you can and prepare a detailed presentation of your product.
For that matter, you should already have a prototype ready and invest in professional video making and editing for the short film in which you demonstrate your product.
3. Be Transparent and Communicative throughout the Campaign
Keep people updated during the campaign. Tell them exactly what steps you are taking to advance your business idea or product manufacturing. Take them behind the scenes to your workshop or home office and show them that you are 100% committed to succeed.
4. Promote Your Campaign
If you want to succeed in your crowdfunding efforts, it is great if you can enlist as many people who know you and can vouch for you either to contribute or spread the word. Thus, you must continually share your campaign in emails to friends and on the social media, post a quick link on your website (if you have one – and it is recommended to have it) and in any other way you can think of.
As many business owners can attest to, crowdfunding really works. It is a viable alternative when you do not have the money you need to open your home-based business and are not prepared to burden your finances with a bank loan.