Crowdfunding – A Smart Fund-raiser for your Business
For aspiring small business owners, lack of funds often becomes the obstacle to live their dreams. Especially those who do not have enough savings or rather, do not feel confident to put their savings into launching their business look for alternatives. Resorting to financial institutions, they find out that they are not qualified to apply for traditional loans. On the other hand, it is rare for prospective business owners not having a good network of investors to ask for help.
So, are you finding it hard to locate the right financial match for your small business? Then, crowdfunding is there for you to give your project a jumpstart. Let’s get to know how.
Crowdfunding – What it is?
“A group of people communicate with each other. They bring together their monetary resources to help other organizations financially.” This is the definition of crowdfunding in simplest terms. This is the very core idea of this fund-raising option. In crowdfunding, each person is the owner of a small stake in a business. This way everyone makes a contribution towards an online funding target. So, with crowdfunding, you can draw the attention of a crowd of people who will give your business the much-needed economic boost.
To make your business successful, you need to promote it consistently and strongly and crowdfunding can help you with this as well. If you are ready to give equity, the investors can represent your brand efficiently and get you big amount of profit.
Crowdfunding vs. Angel Investing
Crowdfunding when compared with angel investing appears to be a more profitable option. In the latter option, an entrepreneur is required to agree to the fact that only one person will be the owner of a larger stake in his or her business. Established business owners can afford to choose this option and may benefit a lot from it.
With lowered investment amount (the minimum), the former option appeals more to the aspiring entrepreneurs. When it comes to collecting funds in the early stages of a business, crowdfunding is considered a better option than angel investment.
Needless to say, angel investors will face tough competition from crowdfunding in attracting prospective small business owners.
How to raise funds with crowdfunding?
At first, grab a good understanding of the concept of crowdfunding and then, determine whether it is meant for you or not. If you are ready to utilize this option, you may follow the five steps mentioned below:
1. Calculate how much money you require to launch your business. It is not mandatory to get all the funds at one go. Instead, it is better to split the entire procedure into smaller targets. This is the way to gain the trust of your investors who will be happy to be familiar with your patient and organized nature.
2. Select the right crowdfunding site. This is a vital step and you cannot go wrong with this. Choose a site after going through their terms and conditions. For example, some sites do not charge anything for posting your project. Instead, they obtain a part of the money you raise. On the other hand, there are sites that demand aspirants to fulfill their set objectives related to funding failing which, the capital is returned to the funders. With some platforms, participants can keep their funds they raise. However, if they do not succeed to fulfill the objectives, the funders can own a larger part of the profits.
3. Work hard on your project. Unless and until you dedicate necessary time and energy to your project, you will not be able to savor the taste of success. Depending on your project, you may require forming a team to pay attention to many crucial aspects like marketing and advertisement.
4. Promote your project. If you do not market your idea, will you come across potential backers? The answer is ‘no’. And social media is a good platform to let the world know about your aspirations. Open up an account in Facebook and Twitter, create your own blog and promote your project through them. Do not forget to keep updating about your project.
5. Gain feedback. A positive response encourages to work better and a negative one makes you determined to improve. Ask your supporters what they think about your idea and how you can materialize it in the best way.
When it seems all doors to help are closed, you should know that somewhere one door is open to fulfill their aspirations. You just need to knock at the right door.
Source: Business 2 Community