The business finance option of crowd funding is growing fast in popularity as an alternative to obtaining a loan from a bank, the more traditional method of obtaining finance. Crowd funding allows you to engage with your customer and target market right from the start, getting their involvement through donations to help finance the product and them with rewards as a thank you.
Crowd funding can be set up easily online and there have been many success stories to come out of crowd funding campaigns. Sites such as Kickstarter, IndieGoGo and GoFundMe allow entrepreneurs the freedom to create a multifaceted campaign whilst also gaining the funds they need to start their business venture.
We always recommend speaking to a specialist before setting up your campaign but to give you some pointers on how to go about starting and managing your own crowd funding campaign we’ve put together a how to guide to help you.
Come up with an idea and do some research
The first thing you need to do before you even think about crowd funding as a finance option is come up with your business idea and do plenty of research around it. Whether you are going to be entering the clothing market, sport, food, electronics etc., you should research the area thoroughly.
Firstly, make sure there is not another product on the market similar to yours and discover whether this gap in the market is something that needs filling. If there is, you need to stand out from the crowd – you need a unique selling point (USP). Also, find out the names of the big players in the field and see what is currently going on in that sector.
Make a prototype of the product
You will need a few prototypes to show potential investors, to use in campaign videos and to test how the product looks, feels and works. If you don’t have a prototype to show potential investors then it is highly unlikely that they will be willing to invest funds in you. Having a few prototypes to hand will make your campaign and pitches easier and more professional.
Decide on the essential information
This important information includes things such as the retail price of the product, the rewards you can and will offer on your crowd funding page, how you will market this product, the social media you will be using, your target audience etc. Knowing all the facts and being prepared for any questions that will be asked once you start pitching is important. Preparation is most definitely key.
Test the waters
Talk to people about your product and campaign to see what they think. Whether their thoughts are positive or negative, they can be very helpful going forward with the marketing of your product and putting together the crowd funding campaign.
Market research is extremely beneficial for all businesses whether you are just starting out or you are simply growing with the launch of a new product. Consumers can often see issues that you may have missed and you can gain a beneficial insight into exactly what they want and how effective they find your product/marketing to be.
Make a campaign video
A campaign video can be a great way of engaging with your potential customer base by showing them the product in action and giving them the story behind it. Video and imagery is extremely important to businesses these days as online marketing becomes the main way many businesses market their products.
A video is engaging for people in a way that a poster or a synopsis on a website is not anymore. Videos made for the internet can easily be shared online, embedded into websites and even turned into a TV advert in future. Getting your campaign video right with a simple but eye-catching message can work wonders for your product and your crowd funding campaign.
Use the power of social media
Social media is extremely important for marketing purposes and businesses of whatever size. The best way to get people talking about your product is to start talking about it yourself. Three of the biggest social media sites have a vast amount of users; Facebook has currently has over 1.7billion active users, Twitter has over 315million active users and Instagram has 500million active users. You can see the huge potential for any business marketing a brand new product with those statistics.
It can be difficult to get something to go viral but hard work, learning to understand your audience and embracing the different mediums for their uses all help. Many businesses and brands talk about ‘creating a buzz’ around their brand and product and that is exactly what can happen when you get a conversation started around your campaign. Hopefully seeing you build on interest and donations.
Set up the crowd funding page
This is clearly one of the most important parts of crowd funding, however it is not something to do at the beginning of the process. A lot of research and development will need to be carried out before getting to this stage. It’s the same as launching a product, you only get there after months of planning, development and refining.
You can set up the crowd funding page yourself through one of the sites mentioned earlier in this blog or you can pay a professional to set it up for you. The benefits of a professional is that they will make sure absolutely everything is on the site and is working before going live, plus they have working knowledge and experience of piecing these sites together.
Consider a PR stunt
To coincide with the launch of your crowd funding page, you could consider a PR stunt to really drive attention to your campaign. In the past, crowd funding campaigners have used flash mobs, concerts and more to grab people’s attention. Some PR stunts cost a lot of money but others are relatively cheap yet they still have the desired effect when it comes to getting some press and interest for your campaign.
For example, if you put on a flash mob in a train station, film it and stick it online, then use relevant hashtags and geo-tag your status people will know where you are. This helps people in the nearby area to see what is going on and you never know they may pop down or click the links to your page to find out more.
Talk to investors and businesses in the sector you are targeting
This is something you can do before or after putting your crowd funding page online but it is definitely something to do. Pitching to investors and venture capitalists as well as businesses in your sector, which are your best bet at stocking your product, is absolutely vital to achieve success after money is raised.
Having money from investors in the crowd funding pot before launching is a great head start for your campaign and it can help convince others to invest. This is a very important part of the crowd funding process and can set you up well for success with this campaign.
Keep marketing, engaging and networking to boost donations
Even when the donations start rolling in and momentum is picking up online, you can’t rest on your laurels. Marketing and networking with people, engaging with your audience and keeping your product/campaign in the media and in people’s minds is very important.
This is not something that will happen overnight and it will take a lot of hard work in order for you to reach your target. Keep thinking of new and innovative ideas for videos, social media campaigns and any new rewards you can add to your crowd funding page.
Congratulations, you’ve reached your target!
It’s a long process, and though it may be simpler for some over going to the bank, it is by no means an easy option. The main thing to remember is that you need to plan a lot in order to create a campaign that has a chance of being a success.
For more information regarding crowd funding, check out our recent blog all about it!