Top Eight Small Business Crowdfunding Tips

Times are tough for the idea rich, but cash poor, entrepreneur. Once generous banks have all but welded their doors shut. And once generous friends and relatives no longer have the disposable funds.

The good news is that some entrepreneurs are having considerable success with alternative forms of financing. One of which is crowdfunding, or asking hundreds of virtual strangers for fifty dollars each.

Should you find yourself with a potentially profitable business idea and you’d like to give crowdfunding a try, here are eight simple tips for pitching a project and reaching your goal.

Choose the Right Site

The first step towards an effective crowdfunding campaign is to simply choose the right crowdfunding website. The right website for you will depend largely upon the type of business that you’re hoping to fund. If it’s something creative, your best bet is either Kickstarter.com or Indiegogo.com. If it’s something more traditional on the other hand, you’re likely to have more success with Profounder.com. Do not rush this step.

Start Small

Your odds of crowdfunding success tend to increase the smaller your project is. Smaller projects seem more attainable and therefore make for more attractive investments. Most people also want to feel like their investments are genuinely making a difference. And this is pretty difficult to achieve with a $50 investment in a $50,000 project. Ask for the smallest sum that can get your business off the ground.

Stand Out

If you’ve spent any time at all on crowdfunding websites, you’re likely to have noticed that there’s certainly no shortage of competition. You’re not the only person with a bright idea and you’re not the only person who needs money to make it happen. If you want to succeed, your pitch therefore has to stand out among everyone else’s. Think long and hard about how you can achieve this. A video, for a start, is a must.

Get Ready

Crowdfunding projects tend to take off surprisingly fast. Most backers are usually found at the very beginning of a project and at the very end. If you want to maximise the potential of your project, it’s therefore very important to plan ahead. Try to anticipate the kind of questions that you’re going to be asked and formulate answers ahead of time. Don’t get caught with an inbox full of questions that you don’t have time to answer.

Make Your Motives Clear

If you want people to give you money, you need to explain exactly what you’re going to use it for. This might sound obvious but a surprising number of people fail to provide enough detail here. How did you come up with the specific figure that you’re asking for? Why not a thousand more or a thousand less? Write up a detailed list of proposed expenditures and make sure that it accounts for every single dollar.

Advertise

Crowdfunding is new. It’s so new that my word processor doesn’t even believe that it’s a word. It’s therefore important not to limit your investor search to those who happen to know what crowd funding is. Promote your project heavily using everything from social media to email marketing. Ask yourself where your target audience can be found and start there. Needless to say, that rich relative should hear about your project too.

Sell Yourself

An often overlooked, but vital component of a successful crowdfunding project is personality. It’s important to realise that when somebody invests in your project, they are not just investing in your business idea, but also the person behind it. It follows that the more trustworthy, intelligent and likeable you appear, the more money you are going to raise. Be the face of your project, and make it a positive one.

Choose the Right Rewards

Finally, there’s the small matter of investor rewards, take the time to choose them carefully. If you were going to invest in your project, what would you most like to receive in return? Personalized product samples are always popular as is advanced access to the product/service that you plan on providing. Don’t be afraid to think outside of the box however. The more tempting the reward, the more tempting that backing you becomes.

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Today’s guest author, Brian Smith, is a financial adviser at Yellowstone Capital, a financial firm that provides business loans to clients in Australia. He is a nature lover and an environmentalist and works towards makings this a greener planet in his spare time.

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