There are many ways to fund a new business project. Traditional bank funding, business cash advances from sites like BusinessCashAdvance.com, venture capitalist funding, and private placements, have long been the mainstays of corporate finance. These can be very effective, but there is a modern alternative: crowdfunding. This allows you to gather the donations of a large amount of people to finance your project. The donations can be small, but since you are accessing many people, they can add up to large amounts.
If this sounds like the way charities work, you’re on the right track. There are significant differences between crowdfunding and soliciting charitable donations. Donors, despite the title, get something back in exchange for their money. The return doesn’t have to be monetary. Sites like Kickstarter allow people to set up projects where the payback can come in the form of something as simple as a download or something fairly elaborate. We offer tips on how you can plan, grow, and connect with your new crowdfunding project.
Timing Is Everything
Set an appropriate length for your project. Thirty days is the most commonly suggested time span for a new project. This gives enough time to accumulate funds, but allows you to end the project before you get burned out. One month is a dependable amount of time to gather sources and compile the funding you need to launch your new venture.
Set Your Sights
Select the appropriate funding target. Make it big enough to be impressive, but small enough to be reachable. You don’t want to limit yourself to any kind of source. Some sites won’t back you up if you don’t hit your goal, so be sure to aim right. Look at similar projects to get an idea of the funding levels that are successful. It’s always a good rule of thumb to compare and contrast.
Set up an online social network before launching a funding project. By having people on your side right from the start, you gain access to those who are most likely to fund your project. Better yet, they can help spread the word to other interested people. If you’re lucky, your project may even go viral. Sites like Facebook and Twitter will allow people to see your progress on a personable scale, including pictures and quick updates. LinkedIn will get you connected to the professionals who are taking an interest in you, and will even get you connected on the down the line with other available resources.
Offer A Desirable Reward
Many people use crowdfunding to finance creative projects that offer incentives. T-shirts, tickets to performances, and other rewards of this nature are common. Different perks are usually offered for various levels of funding in a manner similar to that used by public broadcasting. From enhanced versions of your product to giving contributors credit for its progress, are both examples of giving back.
Have A Theme
Come up with a good theme for your campaign. Find something that can move people emotionally; something that will make the project have more of a sense of community. Since crowdfunding is a collaborative effort, similar concepts are promoted by keeping everyone involved.
By following these tips and being creative, you improve your chances of getting enough donations for your crowdfunding project to do the job. With a successful crowdfunding campaign, you can avoid the cycle of debt and interest that goes with other financing methods.
This Guest Post was written by Joey Ader, a freelance writer and editor pondering all things finance-related.