Preparing Your Business For Successful Crowdfunding
Since the JOBS Act was signed in April, businesses of all types are recognizing the power of Crowdfunding through Social Media and the Internet as an alternative source for raising capital (vs. trying to secure a bank loan, a venture capital firm or an angel investor). Hundreds of millions of dollars have been raised this year through online Crowdfunding, proving the effectiveness of this model for raising funds for new projects and business ideas. However, even with all of the buzz on Crowdfunding, there are still many small business owners who are unsure of how to effectively prepare their businesses for acceptance on crowdfunding platforms.
ProHatch, one of the leaders in promoting expertise and education to the emerging crowdfunding sector, has these important tips to share with entrepreneurs that will allow them to better prepare their projects for acceptance on leading crowdfunding platforms.
Creat a great project:
Prepare a Plan
Develop a business plan for your project and determine a reasonable timeline for your raise. Articulate a clear vision, business model, financial projections, proposed use of funds and an execution plan for the funded project. Funders will want to know that the business model is well thought out, has potential for success and that you are solving a problem or need in the market.
Tell an Engaging Story
Your story is what platforms accept and that "the crowd" funds when they feel a direct connection to a great idea, a game changer, a superior management team or something personal, like giving back. Tell your story directly. Underscore highlights of your plan and how you will execute it. Share your personal passion and the social or business value of funding your project.
Highlight with Video
With the Internet as the platform, crowdfunding is uniquely focused on the visualization of stories as a means of synthesizing projects for vast social media delivery. Telling a compelling story is greatly helped by leveraging video and digital media. Introduce yourself, core points, differentiators, problems solved and what needs to be done to achieve your goals. Choose a unique angle for your video and don't lose the audience's attention. It is best to keep videos under 2 minutes. Also no need for professional quality videos as amateur, organic, production is exciting and interesting when it is well done.
Fuel Funding with Rewards
Rewards can be a powerful incentive that converts people to fund and support your project. Make sure rewards are exciting and have social or economic value that is fairly priced. Also make sure that you have a variety of items or services that people will want. It is important that rewards are tiered to match a range of funding levels from low to high. Offer rewards in the $10-$30 range, as it is likely that most of your funding will come from here.
Include a Fulfillment Forecast for Project Rewards
Transparency is crucial with rewards so be sure to set expectations with your audience before you pitch. Make sure shipping options and delivery schedules are clear. Keep in mind the time it will take for items to be produced, payments to process and for delivery.
Congratulations! You've now been accepted for launching your project on a crowdfunding platform. However, this is just the beginning so be sure to follow these additional tips for ongoing success.
Prepare a Social Broadcasting Plan
Entrepreneurs begin to gain acceptance for their projects by reaching out directly to family and friends and "friends of friends" to build a funding base that validates the project. In many ways, this can be a golden token of approval for your project's success. If your project is funded early by family, friends, and "friends of friends", then the greater audience of strangers will more likely be attracted to your project. In addition, as funding gains momentum, plan to target bloggers and influencers who have audiences of their own who may also further broadcast your project, potentially leading to more funders.
Communicate with Stakeholders
A regular and timely program of updates will engage your audience, convert viewers to funders and funders to stakeholders who promote and fund further. Video, narrative and pictures are an opportunity to keep the conversation going with progress reports on successes and challenges with the project. Regular and timely updates promote transparency, accountability and build credibility for the business plan. Furthermore, enhance communications for your project by building social and business network profiles for yourself, your team and your company. Connect and integrate all of your available online media and content to your project page to increase credibility for your project and broaden the audience of people who will view, fund and re-broadcast your project.
People fund social and business projects because they feel a personal connection and want to participate in something bigger than themselves. There is a sense of pride and involvement that goes along with funding something that could make a difference or is being discovered for the first time. Recognize every backer with a regular and timely program of personal and public recognition.
With funding secured, entrepreneurs must follow through and execute the project as planned. Whether you have successes or failures, tell your stakeholders in a timely fashion. Communicate delays to delivering rewards and reset expectations. Communicate when your plan is on course and when there are hurdles or impasses. Delivering transparently will create a following that trusts you so you can go back to them again for crowdfunding future projects.
Make a Positive Impact
Our mission at ProHatch is to channel overlapping relationships between business, philanthropy and personal projects, and the funders that support these projects, so that responsible crowdfunding is facilitated that will positively impact society and the economy. With this in mind, always ask yourself - "will this project or business positively impact someone's life, create jobs, or contribute to social improvement and economic development?"
To learn more about crowdfunding, visit www.prohatch.com.
The views expressed are those of the author and do not necessarily reflect the views of BusinessNewsDaily.