So you started your business and it’s soaring, just as you knew it would!
Now comes the hard part: keeping it airborne. The first place that you, the entrepreneur, will feel the nip of potential failure is in financing. You’re not big enough, or well enough known, for a bank loan—and you know because you have tried. But you can avert disaster by using crowdfunding.
What is crowdfunding? Taking its cue from what most people call crowdsourcing
(i.e., outsourcing many small, business-related tasks to a large group of interested parties), crowdfunding is the use of small donations from many entities to finance a specific product or enterprise.
This is sometimes referred to as microfinancing, though in fact microfinancing relies on only one investor entity (i.e., a credit union, a social services institution, etc.) and one individual, usually living close to the poverty line in terms of economics and needing to borrow a small amount to advance his or her lifestyle or micro-entrepreneur project.
Crowdfunding involves both the individuals and organizations which hope to launch ideas or projects as well as those offering support. This “platform” allows both sides of the crowdfunding equation to collaborate successfully. Contrary to popular belief—and the old saying that too many cooks spoil the broth—crowdfunding cooperation is precisely what drives success, and it does this via 7.5 simple steps:
1. First, by introducing the company
to a receptive segment of the public, including investors. Use classic methods such as attending a city hall meeting or a business club breakfast, or even a conference like the Marcum LLP MicroCap Conference coming at the end of this month. But do not
leaflet, which is against the law
in some municipalities, and ugly even where it is not. Also consider modern online marketing methods such as using your social media platforms to connect with investors (LinkedIn is great for this).
2. By providing an initial marketing assessment, good or bad, of the public’s response to the idea or project (via survey and posted on a web page, for example, or mailed to a group of participants; people love to think their ideas are listened to).
3. By providing a medium through which project owners or inventors can collaborate continuously with an audience by providing periodic updates. This can be done via the project’s web page or the crowdfunding platform you have chosen (Kickstarter, IndieGoGo, etc.). The responses will both surprise and delight you).
4. By providing investors with early access to company information (for example, inviting them to beta-test a concept, which is in itself a good marketing metric), even if it means more oversight to prevent idea snatching and/or web page copying.
5. By reaching goals either in the financial or the production arena, and preferably both, to instill confidence in one’s investor audience.
6. By operating with as much transparency as possible while protecting proprietary information or analysis.
7. By building on prestige and brand recognition so as to attract new investors, instead of wearing out the patience of the old ones, and
The half step? Operate your campaign across as many languages as are relevant to your demographic. For instance, the legal website Ginarte.com has a landing page which is designed to provide information in English (of course), Spanish, and Portuguese. These latter two also represent the two largest ethnic groups in the New York/New Jersey area. This step will help you get your message out to a larger audience and possibly increase the amount of funding you would ultimately receive.
You have a plan, and it’s a good one (your investors agree wholeheartedly, or they wouldn’t have parted with their hard-earned money). You also have a marketing background, so you know what sells and how to sell it. Finally, you are an Alpha—male or female, so you don’t know the meaning of defeat, only delay. Put your idea into action and get to work.