What we’re asking sounds dubious at best; delayed delivery from manufacturers with no proven record for projects that are in their infancy. But, everyone from coffee makers to rock groups are turning to crowdfunding to source capital for their next big idea. Instead of trying to get a large amount of capital from a single source, crowdfunding asks many investors to part with smaller sums which they are more likely to do. From throwing your support behind an idea or project to advance-purchasing potential products, crowdfunding is fuelling a whole new generation of innovation in business and can be an excellent marketing strategy.
Crowdfunding has its ups…
There are benefits to crowdfunding that make it a very viable option. You don’t have to have any experience or give away profit shares or a stake in your company the way you do to most other investors. Commercial crowdfunding sites enable you to raise the capital you need and give you an instant customer base. Crowdfunding initiatives mean you already have an advertising strategy and social media outreach in place before you’ve even started manufacturing your product. It allows you test out your business model and your product with very little risk to you or your customers. Best thing is… its free!
And its downs too…
Some of the disadvantages of crowdfunding are that it takes some marketing chutzpah to get the ball rolling. You need to have comprehensive branding, a very effective social media campaign and (most importantly) a killer video. If you are a genius in the lab, but rubbish in the marketing department, then hire a professional; your crowdfunding idea will succeed or fail based solely on your marketing campaign.
Let’s go back to the point about the video which deserves more than a sideways glance. Your video is the single most important arrow in your marketing quiver. Without a storefront or personal connection, the video is the only place you have to tell your story. Be sincere, be yourself and, for the love of all things sacred to marking, don’t make a video of your dog selling your product.
Putting your idea out there before you have produced a product means that everyone else can capitalize on your genius. Ensure that products are patented and that trademarks are protected. You can protect your trademark by registering it with your local trademark association.
Asking a large number of investors to contribute can turn into a logistical nightmare as you scramble to answer investor queries while trying to push your product to production. Automate communications and tell your story in a sincere, personal way to turn your investors into raving fans.
Crowdfunding provides a small injection for initial start-up, but not the money needed to sustain a new business. While crowdfunding capital may be enough to get your product to production and pay for the first batch of orders, there is then no funding for overheads, salaries and raw materials that a single big investor may be able to provide. So don’t give up your day job just yet…
Crowdfunding started out as social experiment and has turned into one of the leading drivers of small business today. It stimulates innovation and gives many intrepid entrepreneurs with good ideas a viable way to start businesses of their own. It’s not something to be entered into lightly; it takes careful planning, vision and a stellar marketing campaign that is comprehensive and organized. While crowdfunding does give budding businessmen and women an opportunity to shine, it doesn’t suffer fools. If your advertising and social media campaigns aren’t engaging, it doesn’t matter how good your idea is, it will be information superhighway road kill before you can say “Hey this video of my dog trying to sell my new invention is really cute…”