There are many ways to try to get funding for your business, for instance you can use credit cards, get a traditional loan from a bank, take out some of the equity from your house, or use crowdfunding. Crowdfunding presents a great opportunity for many businesses, but how do you know if it’s the right thing for your business idea?
Do You Have a Good Plan?
You need a very solid business plan to set up a crowdfunding campaign, regardless of which type of funding you’re seeking. The reason is that the information you can provide about the work you’ve done, will do, and can do for your business will matter to the investors. If you don’t have a real business plan, don’t try to get crowdfunding.
Do You Know How Much Money You Need?
If you have created a good business plan, you will know exactly how much money you need to raise. If you don’t know how much you need, then you can’t do a crowdfunding campaign because you must say how much you want to raise for it to work.
Can You Make a Valuable Offer to Donors or Investors?
If you do equity funding, how much equity are you willing to give up for your total needs? If you’re not willing to give up a good percentage of your equity in exchange for the amount you need, it’s not likely very many people will be interested. If you are doing the reward type funding, then you should try to offer something worth it to your donors.
How Does Your Target Market Feel about Crowdfunding?
In some cases, your target market may hate the idea and lose faith in you. It’s not because crowdfunding is bad; it’s because some people don’t understand it. You may consider a campaign of education before you do it if this is the case.
Do You Have a Marketing Plan Ready?
Once you set up your crowdfunding campaign, it won’t raise money by itself. You will be solely responsible for marketing your campaign. You should consider this in your budget too, because the best way to get the word out is through paid advertising.
Can You Invest Significantly Too?
You may not have money, but you must be willing to do the work it takes to get the word out and see your vision through should the funding come forth. Don’t wait around to see if the funding is coming, though; do what you can before you get the funding, so you’re ready.
Do You Understand Crowdfunding?
Before you embark on this journey, do your research so that you understand all the different crowdfunding options that exist for your business. Some may be more appropriate than others. Remember to read and understand the terms of service of any crowdsourcing company you use.
Can You Make a Good Presentation?
If you aren’t good with making presentations, you may want to hire someone to help you so that you can show your potential donors, backers and or investors everything you are going to do and do in the best possible light.
Keep in mind that less than 1/3 of crowdfunding for businesses meet the goals they set for the fund. In some cases, that means they won’t get any of the funding at all. But that doesn’t mean it’s not a good idea to try.