The hyper-connected element of the Internet has made drastic changes for America's small businesses. Entrepreneurs no longer need to rent store space to get started, they can start an online shop for significantly lower costs to help get them off the ground. Social media has made advertising and connecting to consumers easier and more affordable than ever. Startups can even gain their capital through specialized crowdfunding websites to solicit financial backers.
While there are many potential benefits to crowdfunding, there are risks associated with it as well. To have a successful crowdfunded campaign, entrepreneurs need to use these tools to their full potential.
"Experts recommend not starting a campaign at zero."
The advantages of crowdfunding
Crowdfunding can be an easy and affordable way for a new or growing business to get the investors it needs in order to take the next steps. According to Wave Front on Wireless, a big benefit of gaining funds through these online donor programs is that it allows business owners to receive money without giving up any equity. Contributors simply give money to a cause or product that they believe in and want to see succeed. While some business owners will offer incentives to donors who give certain amounts, at its core a crowdfunded business receives money without having to relinquish anything in return. recieves money without having to relinquish anything in return.
Not only does accepting these startup funds help get a new business off the ground, but it can also ensure future customers. People will donate to a business or a product because it's something they want to have access to. Once the business is actually up and running, these early online investors will usually return to purchase the product once it's on the market.
This process is also very user-friendly to the entrepreneur. While typically some percentage of the sum collected will need to be paid to the website that hosted the fundraiser, there is very little if any out-of-pocket cost. Business owners can use social media to advertise their crowdfunding campaign and don't need to spend money on renting spaces for large-scale public presentations. Everything that needs to be said about the product or business can be said online in an easy, user-friendly platform.
How to make crowdfunding work
There are some downsides to crowdfunding. While it can be an easy way to successfully gather the capital needed for a new business, it's entirely possible for a project to get little or no backing online. For a crowdfunding campaign to do well, it needs to be simple, have an attainable goal and offer something that people generally want or need.
According to Forbes, there are few things an entrepreneur can do to increase his chances of success with crowdfunding. The first is to have a clear message. Donors won't give to a project if they can't understand what it's for or why it's needed. Business owners need to be clear and direct about their mission statement, what they are hoping to build and how they are going to do it. People will only give money to a project they think can actually launch. It's important to outline how much is needed and why so contributors know where their money is going.
Experts recommend not starting a campaign at zero. Offer up some capital from the get-go to improve its appeal to contributors and give them more faith in the project.
Equipment and business industry piece brought to you by Marlin Equipment Finance, a nationwide provider of commercial lending solutions for small and mid-size businesses. Marlin's equipment financing and loan products are offered directly to businesses, and through third party vendor programs, which include manufacturers, distributors, independent dealers and brokers in the security, food services, healthcare, information technology, office technology and telecommunications sectors.