How to fund your business with crowdfunding, Part 2

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How to fund your business with crowdfunding, Part 2

Published By Janet Gershen-Siegel at September 19, 2017

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In part 1, I mentioned 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. Here are the last two.

Novelty

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 better-tasting. Or your services have to be delivered better, by friendlier and more knowledgeable people, and with a money back guarantee your competitors don’t offer.

Cool factor

Is your product a form of art? Is it a new, gadget-like invention? Then it might have a coolness factor which you can build your campaign around. But don’t be discouraged if it’s not! These days, some of the most memorable ad campaigns are based around a product most people found dull not ten years ago – insurance.

Strategy

A few words on strategy:

  • 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 doesn’t have to be word for word but you should have points you want to make and not ramble.
  • 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 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 isn’t vaporware.
  • Manners matter. 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 in the cover letters you send with your perks (even virtual perks can come with a cover email).
  • Don’t be greedy! If you need $250,000 for your campaign, but you ask for $1,000,000, that doesn’t do anyone any good. You’ll just look like you want to freeload off others’ generosity. Instead, 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 be honest!
  • 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 is $125,000. Pie in the sky is $300,000. 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 five more people? Replace your old equipment? Open up a new market on another continent? Let your donors know what you are striving for.
  • 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. If you wanted $100,000 and you only got $500, your best bet is to just return the money. If you almost made it with $95,000, then thank everyone who donated and see what you can do, even though there’s a shortfall. And tell them what you’re doing! Maybe you’ll buy your building next year, or hire four people instead of five.
  • Line up the biggest donors you can before you get started. Tell your mother or your brother in law or your former high school football coach to hold off on handing over their $1,000 or $10,000 donation until you start your campaign. And ask them (nicely!) to release their funds at a very specific time. Which time? The first or last day of the campaign. Take advantage of the novelty factor of the first day of the campaign, or the urgency factor of the last. Much like a busker with a few of her own dollars in her hat, to encourage people to throw a few bucks for a song, you want your biggest donors to show other donors that they have confidence in you and in your project.
  • Share your campaign on social media and 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 or write a blog post about it. Ask your network to circulate the link. The best way to get your network to help you out is by helping them in return. 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 your network will be far more likely to help you out when you ask.

Finally, if your small business crowdfunding campaign is successful, consider donating a few bucks to others’ campaigns, or at least to charity. Because business goodwill and a good reputation are priceless.

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