It's CROWDED in Here!

So as I mentioned in my last blog, I want to take us on a journey that I think many business owners may find themselves venturing, crowdfunding.   Crowdfunding is basically looking for people to invest in your business, project or venture.  It a way to secure capital from people that are solely interested in what you are doing.   These folks are your investors.  They believe in your project so much so that they wish to help you build upon it and achieve the goals have set in regards.  As would a traditional investor, they would like to know of course that their investment will pay off of course and they want to know how and when.  They are certainly putting more at stake as opposed to a traditional investor who knows your financial status, your ability to repay back funds invested and even if not they know how to find you and your assets!

Crowdfunding is a form of fundraising…in that there is a project or business idea and multiple people that are interested in it and they decided to invest in the project.  So it is literally a method of fundraising however you can best believe your investor are looking for tangible and measureable and personal returns.

Now there some sites that lend to crowdfunding for all type of projects.  Fundraising for various goals that do not necessarily have to pertain to business.  Gofundme.com is specifically for this type of fundraising.  There are a number of projects found on here from business owners to individuals.  People of raising funds for a cause, for personal. I mentioned the more popular ones last blog and for sake of this project we will engage in a couple.

Here are some interesting facts and numbers about the global effect of crowdfunding from the eFundingreport:

·         More than $57,000 is pledged to a crowdfunding campaign somewhere in the world every hour of every day.

·         The five most popular categories of successful crowdfunding campaigns are gaming, technology, design, film and music.

·         Rewards-based campaigns on Kickstarter successfully fund 42.8 percent of the time. On Indiegogo, the success rate is 14.4 percent.

·         The average number of backers of a successful Kickstarter campaign is 255.

·         An average of 325 new crowdfunding campaigns launch every day.

So therein lies a few good reason why it should be a good idea to look into crowdfunding, right?  The key however is in the delivery of the package.  If you can imagine how many people submit on the number of websites available, for your project to make the impact it needs to capture the investors you wish, you should need to have a dynamic project that reels them in right away.

Some of the tips we have found online I list here for our edification and as a point that we will assess as we put our own crowdfunding project together.

KEY TO A SUCCESSFUL CAMPAIGN

1.       Keep it short in timeframe. You want to create project that you intend to solicit for only a short period of time.  It should be more than 30 days.

·         Budget – know your numbers as they say on Shark Tank. However you need to show your potential investors what they are getting into financially.  At the end of the day, your project has to be profitable and needs to show where and how.

·         Be cautious of how much money you spend on putting your project together.  You want an impact but think logically the overall return on your project.

·         REWARDS – Everyone wants to get something out of their investment.  You have to consider incentives.  Incentives can be and should early on for getting involved and it does not always have to be monetary.

·         By all means reach out to people you know…they will support you!

·         Follow up and stay in touch.  Let people know you are out there checking in and looking for responses.  People need to know you are engaged.

So with all that said, we are going to get started.  Our project will be small since typically they are.  I hope to show you in some way the moment with putting a package together and putting in a crowdfunding site.  We can see what happens!

I have a children’s book that I wrote about 5 years ago just after my daughter was born.  She was a preemie born 2lbs and was a ward of the Neonatal Care Unit for about 2 months before she was allowed to come home.  The children’s book dives into the world of a NICU from the perspective of the infant. It is a children’s story for an audience ages 3-5yrs old. The project is to raise money for the production of the book, from publishing, graphic design, marketing and final distribution.

We will use this as our test and go from there.  Let the fun…FUNDING begin!

Let’s Put the FUN in FUNding!

You know what. I would like to take a pause for the cause for a minute.  As you know my blog is about business matters and all things pertinent to growing your business.  While doing so is helpful, it has only been since some recent occurrences have I found a topic worth discussing.

I have talked to many people about their business and life dreams and it occurs to me…under every cause, purpose and endeavor the underlying theme surfaces.  “I need to make more money.” “I could use someone to invest in what I am doing.”  “There so many things I could do if I had more money to support the business.”   

So let’s get down to the heart of matter.  You have established your business and you are on your way however what are you doing to build yourself as a PROFITABLE SUSTAINABLE BUSINESS?  Sure it is great you are networking and setting up your websites and passing out business cards, but do you know what you need to build yourself as sustainable company.  It is not enough to be profitable but to be sustainable.    Do you know your operating costs and do you know what your costs will be in the future.  And the question of the day…do you know if your business will sustain itself in the years to come or will you need an infusion of cash to do so?  Maybe you will need money to also expand on business strategy?  May be you want to expand your business in the next 5 or so years?  Do you know how on track you are to getting there?  Have you planned how you are going to get there?

Too many questions and so little time, right?  Well for today’s blog I want to focus on one small aspect of building your strategy and obtaining the funds you need to support your vision.  Recently there have been many topics on raising funds and capital for building a business.  While some have relied on traditional forms of securing money, many SBOs are not always fortunate to be able to refer to those avenues.  Perhaps they are tapped on their credit line, maybe they just lack expertise in the area of investing and finances to know the options available. 

Today a hot topic has been crowdfunding, an outsource that is becoming more widely available to small business owners looking to raise money for their businesses.  It has been around for a while but in the wake of the number of budding entrepreneurs it is vastly becoming more of a common practice.

Small business owners use this method of outreach from gaining input on ideas and feedback on business ventures to request financial support from folks interested enough to back the idea with money.  Both SBOS and investors use crowdfunding for engaging in equity leveraging which of course benefits both parties in the end.   The nice idea about this approach is it allows for securing capital via less traditional methods.

Now of course having said that, the KEY is paramount that you vision as the opportune business for someone to invest in.   The key is to show to anyone interested in your business, particularly if you looking for investors, that your idea, business or project is and will prove to be sustainable and best of all profitable.   Therefore the KEY is to be steadfast and KNOW YOUR BUSINESS and to be transparent and forthcoming with how you intend to make it a business worth the investment.

For purposes of illustrating how effective these points are, for the purpose of this blog I will be taking you through the growing stages of a business owner not only presenting an idea but how she will leverage herself as a successful crowd funder presenter.   We will take you through each step and misstep and discuss what to do and NOT to do to build the most successfully project for your potential investors.

The business idea will be centered around an idea – where it all starts.  

STEP ONE….choosing the right platform.

Choose the right crowdfunding platform. Make sure the site you choose meets your particular needs, including the right type of product or service, the type of rewards or equity you can give, the amount of money you can raise and the amount you need to raise before receiving anything.

Nonequity crowdfunding is soliciting money for a benefit other than equity: the pre-sale of products, invitations to special events, recognition as a sponsor, small gifts.

This can be a great way to make money before you've developed or finalized your new invention without giving up any ownership.

Equity crowdfunding is soliciting money from a large number of individuals in return for small amounts of stock in the new company.

Do not offer up part of your company unless you are truly committed to doing so.  Equity is very attractive incentive for an investor so if you promote it, they will come.   So be certain this is the avenue you wish to go.

It is important to really think this through.  You want to do your research and be certain as to which platform you choose.   Remember you are presenting your idea to a potential investor and the last thing you want to be seen as someone that changes up and does not seem to know what direction to take.

Now Forbes lists the Top 10 sites to which you should look into each as well to see if it speaks to the platform you want to build.  Take the time to look into each one.  Look to see what others are doing on the site; how they are presenting themselves and more importantly which one are gaining attention.

1.Kickstarter

Kickstarter is a site where creative projects raise donation-based funding. These projects can range from new creative products, like an art installation, to a cool watch, to pre-selling a music album. It’s not for businesses, causes, charities, or personal financing needs.

2. Indiegogo
Indiegogo approves donation-based fundraising campaigns for most anything — music, hobbyists, personal finance needs, charities and whatever else you could think of (except investment).
3. Crowdfunder
Crowdfunder.com is the platform for raising investment (not rewards), and has a one of the largest and fastest growing network of investors.

4. RocketHub

Rockethub powers donation-based funding for a wide variety of creative projects.

5. Crowdrise
Crowdrise is a place for donation-based funding for Causes and Charity.

6. Somolend
Somolend is a site for lending for small businesses in the US, providing debt-based investment funding to qualified businesses with existing operations and revenue.

7. appbackr
If you want to build the next new mobile app and are seeking donation-based funding to get things off the ground or growing, then check out appbackr and their niche community for mobile app development.

8. Angel List
If you’re a tech startup with a shiny lead investor already signed on, or looking for Silicon Valley momentum, then there are angels and institutions finding investments through Angel List.

9. Invested.in
You might want to create your own crowdfunding community to support donation-based fundraising for a specific group or niche in the market.

10. Quirky
If you’re an inventor, maker, or tinkerer of some kind then Quirky is a place to collaborate and crowdfund for donation-based funding with a community of other like-minded folks. Their site digs deeper into helping the process of bringing an invention or product to life, allowing community participation in the process.

So for the purpose of this blog, I am going to check into each one and report back based on our project.

So excited to get started. See you next BLOG!

Leslie Crudup for the Business Liaisons – Business and Life Coaching

www.thebusinessliaisons.com