If you want to use crowdfunding to get your start in business, you’re in the right place, as this week on the Htet Tayza blog, I let you know how.
What is Crowdfunding?
As I’ve previously alluded to, it’s hard to start a business with no money. Yet you need capital to bring your idea to life, which is why the minute the ink dries on your outstanding business plan, you need to think about how to secure funding.
More and more, start-ups are turning to crowdfunding to generate enough capital to get themselves off the ground. Essentially, crowdfunding is the practise of using a specialised website to ask for small donations from a large range of people for your project.
Follow These Tips to Crowdfund Effectively
It’s actually fairly easy to do; just set up an account on a crowdfunding website, make your pitch, get your campaign rolling and watch as the money pours in. Yet, it’s not an automatic money spinner. There’s a skill to effective crowdfunding, and that skill involves…
- Picking the Right Website: There are a myriad of crowdfunding websites out there, and they all have different purposes, audiences etc. Only by picking the right website to launch your campaign, can you hope to capture the attention of the market most likely to have a vested interest in your cause, and thus be willing to donate funds.
- Knowing Your Target Audience: That leads us into point number two, you need to know your target audience. Yes, these people are donating money, but even donated money has a vested interest. People actually have to care about what you’re doing in order to find the will to donate, which is why you must always gear your campaign towards your target audience.
- Preparing Yourself: Sometimes crowdfund donators can be worse than actual investors. You can be sure they’ll have a barrage of questions, and won’t be willing to donate if they feel unsatisfied with your answers. That is why you need to do every bit of research you can ahead of time. A good tip is to prepare a fact sheet potential donators can refer to so you don’t have to waste time having to answer individual enquiries.
- Make a Business Plan; Donors are often like banks; they want to know how you will spend their That’s why you need to have an effective business plan to hand to allay their fears. Also, try to have some capital to hand that you can show in your business plan, to illustrate how other investors see you as a safe bet.
- Getting on Social Media: Most people don’t tend to peruse crowdfunding sites looking for a good cause. Like with any other business, you need to generate interest with an effective marketing strategy. The large audience and free nature of social networking sites make them the most cost effective marketing strategy in existence!
- Incentivising Your Donors: Whilst some people are happy to donate for nothing in return, most at least want something. That’s why most crowdfunders offer some sort of incentive; usually a free product from the business the individual in question is donating to.
Think of Your Potential Donors as Potential Investors
There’s no denying that crowdfunding is the most cost-effective tool you have at your disposal to generate the funds you need to start out on the road to success as an entrepreneur. Yet it still takes work. Think of your potential donors as potential investors and go from there.