How Can a Small Business Benefit from Crowdfunding?

Crowdfunding has been the latest craze in helping people fulfill their dreams and turn them into reality. I am sure many of you have heard of Oculus Rift, a virtual reality headset that allowed for the most immersive video game experience ever. It was brought into the market through the help of generous people via crowdfunding.

Now, money isn’t the only thing that crowdfunding brings to the table. There are a variety of other externalities that can benefit your business or your idea through the use of this financing option.

Capital

You may not have saved up as much money for your business venture as you thought. Your need just a bit more to develop your dream idea—what do you do? Perhaps you should look into crowdfunding for those extra few coins.

If you and your idea appeals to people, it can attract not only attention but a sizable amount of cash to help push that idea into reality and into the hands of consumers.

This method won’t require you to hand over any of your business equity and you won’t accumulate any debt as a result. Of course, you may choose to provide donors with gifts and have them be the first to receive the product once it’s ready to be delivered.

Can Serve as a Proof of Concept

Even before sacrificing your own savings and taking out loans on an idea that may or may not work, you can provide the concept idea to the public. You don’t even know how the market will react to your product until it’s launched—or through crowdfunding you will receive input before committing your resources.

When you start gathering capital from your audience, this will give you validation that your idea is worthwhile to pursue and introduce it to the market.

Marketing

New ideas and new products need to be marketed and introduced to the audience—cultivating awareness. Think of crowdfunding as that first marketing step, the introduction phase of your product.

Build yourself a follower base even before launching the product. The people that have committed their money to your success will be constantly monitoring your progress and will talk about it in their circle of friends.

Even if you don’t reach your funding goal, you will be able to see how the consumers react to your new product.

Mitigates Financial Risk

Through crowdfunding, you’re not putting your business or any of your assets on the line. Acquiring loans through banks will need to be paid back with interests, bringing on investors may lead you to sacrifice equity of your business.

If your business doesn’t work, or isn’t profitable, you may run into issues with paying back the money that was borrowed—a risky endeavor.

Crowdfunding is sourcing income through good willed individuals that like your idea and want you to succeed.

Gather Feedback

Displaying your idea through crowdfunding websites allows you to gather useful consumer feedback. Your audience while supporting you financially may also provide you with valuable feedback that can help improve your idea.

Going through the process, you may have overlooked some crucial elements in the design. People from all around the globe will be able to share their thoughts and insights on what they like with your concept and what should be amended moving forward.

Doesn’t Cost Anything

Crowdfunding doesn’t cost you a penny. Some crowdfunding web pages will deduct a certain percentage of what you gathered, but won’t charge anything upfront.

You have everything to gain but nothing to lose when you choose to crowdfund your business venture. You may be even able to gather ALL the necessary capital to pursue your idea without sacrificing anything from your own pocket.