Part 2 Fund Your Business with Crowdfunding: Tap into the Spirit of Human Generosity
So back in part 1, I talked about the history of crowdfunding. And I also went over some basic concepts such as how to choose how much to ask for. Plus I talked about perks. But now is the time for us to get back into the nitty gritty of the crowdfunding campaign itself.
Fund Your Business with Crowdfunding: Your Campaign
In part 1, I mentioned that there are four feelings you want your donors to have. And you want to use these as the centerpiece(s) of your small business crowdfunding campaign. Those first two were urgency and scarcity.
So now here are the last two feelings you want to evoke in your donors and in your potential donors.
If you are offering the same thing as a thousand other places, no one will want to make a donation. Your widget has to be lighter, hotter, cheaper, or more durable. Your food has to be lower in calories or higher in nutrition. Or at least it should be better-tasting.
Or your services have to be delivered better, by friendlier and more knowledgeable people. And they should come with a money back guarantee your competitors just plain do not offer.
Think about how services or goods can differentiate themselves. Why do some people prefer Macs? Why do others prefer PCs? And why do some people want to get their insurance from Progressive? But others want theirs from Liberty Mutual.
Consumer choice, particularly in the United States these days, is huge! So offering true novelty can be a way to try to get beyond all of that clutter. And it is a lot of clutter indeed. Have you been to a toothpaste aisle in a drug store lately? Yeah. It is just like that.
Is your product a form of art? Is it a new, gadget-like invention?
Then it might have a coolness factor. And then you can build your campaign around that. But do not be discouraged if it is not! These days, some of the most memorable ad campaigns are based around a product most people found dull not ten years ago – insurance.
Fund Your Business with Crowdfunding: Strategy
Here are a few words on strategy.
There’s the Windup and Here’s the Pitch!
You will not get anywhere without a pitch video. Yes, even you, you camera shy business owner, you!
Your pitch video needs to be good. Use a professional to film it and write the script. Can’t afford professionals? Then try schools, both students and teachers. Your script does not have to be word for word. But you should have points you want to make and not ramble. A script will help you to focus on exactly what you need to say. This is absolutely not the time to wing it.
Taking time with a script will show in every frame of the finished product. And your professional film maker? They might be charging you by the hour. So it is a really good idea to spend some time on a script or at least an outline of one. Do this before your professional film maker goes on the clock.
Evidence, Your Honor
If you have physical evidence of your project, show it in your campaign video and on your campaign page. This means a picture of your health club’s sign. Or it could be a short video of your prototype robot.
A lot of people are understandably skeptical about crowdfunding. A picture and a tangible thing will go a long way to assuring them that your project is not vaporware.
Your Mother Was Right
Manners matter. ALWAYS. Say please, thank you, and you’re welcome to everyone. Use these magic words in your pitch and in your communications with your donors. And even use them in the cover letters you send with your perks. This is because even virtual perks can come with a cover email. And they should, as that is another chance to connect with your donors.
Greed is Not Good
Instead, work hard to account for your expenses as clearly and transparently as possible. And by the way, if you misuse your funds, you might find yourself in an uncomfortable meeting with your state’s attorney general. So always, always, ALWAYS be honest!
If you need help, then hire an accountant or at least a bookkeeper. Much like with your pitch video, if you are low on cash, you can then try a local school.
Keep Your Feet on the Ground, and Your Head in the Clouds
Your stretch goals should be a mix of easily attainable and pie in the sky. If you are crowdfunding for $100,000, a fairly easy to attain stretch goal could be $125,000. Pie in the sky could be $300,000. Only you know your donors, or at least you know some of them. Be realistic about your prospects when it comes to your base. But for stretch goals, feel free to go just a little bit wild.
Make it abundantly clear what you will do with any extra cash if you are fortunate enough to get it. Will you buy the building your business is in? Hire four more people? Replace your old equipment? Open up a new market on another continent? Let your donors know what you are striving for.
This is also an excellent way to help get your donors to feel more invested in your project.
Grace is Amazing
Be gracious if your campaign fails. Even if you use GoFundMe’s flexible funding option, you still might not get enough to make a dent in your funding needs. And of course with most forms of crowdfunding, you have to give everything back no matter what.
But let’s look at how to handle this kind of a situation if you took advantage of the flexible funding option.
Make an executive decision about the funds. If you wanted $100,000 and you only got $500, then your best bet is to just return the money. This kind of a shortfall should also give you a reason to take a good, hard look at your pitch, your campaign, and even your idea. Maybe you are being overly optimistic. A bad failure in crowdfunding can have a way of throwing a bucket of cold water on your dream, yes. But sometimes, that is exactly what you need.
If you almost made it with $95,000, then thank everyone who donated. And see what you can do, even though you have a shortfall. But also tell them what you are doing! Maybe you really will buy your building next year, or hire three people instead of four. Once again, get your donors invested in what you are doing. It will make an enormous difference.
Timing is everything
Line up the biggest donors you can before you get started. Talk to your mother or your brother in law or your former high school football coach. And ask them to hold off on handing over their $1,000 or $10,000 donation until you start your campaign.
Also ask them (nicely!) to release their funds at a very specific time. Which time? The best times will always be the first or last day of the campaign.
Take advantage of the novelty factor of the first day of the campaign. Or take advantage of the urgency factor on the last day of your campaign.
Think about the busker (street musician) with a few of her own dollars in her hat, to encourage people to throw a few bucks for a song. Taking your cue from her, you want your biggest donors to show other donors that they have confidence in you and in your project.
When You Care, You Share
Make sure to share your campaign on social media. And always ask your friends and family to do so, too. Tweet the link. Add it as a Facebook status. Make it a Tumblr post or a snap on Snapchat. Tell TikTok. Or write a blog post about it. Be proud of what you are doing! Tell the world!
Also, ask your network to circulate the link. The best way to get your network to help you out is by helping them in return. So if your cousin’s band is on Facebook, share their page, or tweet about it.
Be a cooperative member of your own personal community. And then your network will be far more likely to help you out when you ask.
Fund Your Business with Crowdfunding: Takeaways
Finally, if your small business crowdfunding campaign is successful, consider donating a few bucks to others’ campaigns. Or at least donate a few dollars to charity. And this is because business goodwill and a good reputation are going to be priceless. Karma in crowdfunding matters.