By
Humphrey Udoh
Crowdfunding a business could be another game plan for small and medium size businesses to raise funds.
Because it’s safer to use than take a loan that has huge interest.
This guide to crowdfunding a business will walk you through the details that even a dummy will understand.
Crowdfund has been developed by using a groups of people to pool resources together via the Internet for execution of projects.
Maybe you’re still new to this concept but this guide will be an eye opener.
Introduction:
Ever since the British rock band funded their comeback tour in 1997 through their online Fanbase crowdfunding.
It has been successfully used by many people. And proven to be affecting means of fundraising.
Instead of using traditional financial loan agencies and venture capital to raise funds, business owners choose crowdFunding.
Because it’s a safer and better method of fundraising a business.
This guide is mostly for beginners who don’t know how to crowd funds for a business.
We are going to break it down step by step to allow you to understand how to crowdfund a business.
Table Of Content
- Introduction
- Understanding Crowdfunding
- Benefits Of Crowdfunding A Business
- Crafting Your Campaign
- Launch And Promote Your Campaign
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- 5. Managing and Promoting Your Campaign
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6. Lesson Case Study
7. Conclusion
8. Call to Action
Let’s delve into each of steps proper
- Understanding How To Crowd funding a Business
Crowdfunding a business is mostly done virtually where a group of people come together to raise funds for a venture.
It’s mostly done by using acquaintances, online fans, family members and friends.
Either to raise capital seed, sponsor non-profit projects or improve a business standard.
- Benefits Of Crowdfunding A Business
If you asked me, is Crowdfunding beneficial to business? I’ll say yes.
It comes with many benefits but I’m going to reveal a few of them.
- It’s a Grant without Interest
Crowdfunding ventures are mostly like a gift to the business owner.
It doesn’t have any string of refund attached to it. Just like charity or a gift from a friend.
- Business Validation
If you want to Crowdfunding a business please know that it comes with openness.
The project initiator has a duty to explain what the fund is meant for.
Breakdown of the fund is necessary for the team to understand.
- Open Fundraising To Wide Audience
For crowdfunding to have desired goals it should be shown to a large number of people.
That’s to say that you should have a large audience or fanbase.
People who have connected with you in one way or the other through online or offline.
- Community Fundraising
One of the things that makes it easy to crowd funding a business is that the people who you have known before.
So they have no fear of who is getting the money or what will happen to the fund.
Challenges of Crowdfunding A Business
- Promise fulfillment may most likely be a great challenge.
If the sponsors are not meeting up to their promises.
What I mean is if the sponsors fail to redeem their quota as at when due.
- If the fund is not complete at the expected time.
- Enough of public remainders and motivation is needed in some cases before sponsors would deliver their pledges.
- Crafting Your Campaign
Before you start your digital fundraising project.
Consider what amount you need.
Break it down into fractions and explain how much.
Be clear with what the fund will be used for. If you’re honest in your dealing.
It will build trust and confidence that their money will not go down the drain.
Places You Can Crowdfunding a Business
Includes:
- CrowdStreet ( real estate project)
- Crowdfunder (best for Shopify)
- Fundable (best for small businesses)
- Patreon (Best for Content Creators)
- Crowdcube (US and UK based)
Legal and financial implications
Understanding the legal implications of Crowdfunding sites is very important.
Because if the condition of Crowdfunding a business is broken the consequences will be heavy.
The Financial Implications
Before you start your fundraising project beware of trust factors so you don’t misuse it.
For that reason you should keep to your promises and ensure the fund is not misuse.
Campaign Creation for Fundraising
Sometimes in crowd Funding a Business you may be instructed to do a presentation.
If you have a presentation for the fundraising project.
Craft attention grabbing hook story to draw the minds of the financers.
People also read:
- Launch And Promote Your Campaign
This is where you do the needful when launching your campaign to reach prospective backers.
i- prelaunch information via email list, article writing or social media post.
ii- use social media influencers or your fanbase to share the news.
iii- interaction with the business fundraising audience.
Engage with the fundraiser by replying to their messages in response to their findings or any challenges related to payment.
- Managing and Promoting Your Campaign
It’s time to monitor the progress of your campaign to know the level of performance.
Track how much is coming in.
Carry out your equity promise to those fundraisers
By giving them physical or digital items as a way of appreciation.
Plan how to excuse the project.
Either doing it bit by bit or whatever way.
If you’re using a Crowdfunding website you ensure to use the analytics tools on the dashboard to track the process.
Pitfalls to Avoid in Fundraising Raising
- ignoring questions from funders
- Setting unrealistic goals
- misuse of funds
Tips To Crowdfunding Guide
- Set specific goals
- Be honest with funders
- Reward funders with gift of you can track them
- Use fund for is meant for
Conclusion
If you ever want to start using Crowdfunding for a business venture, start now.
Because the return is better than taking loans from the financial institution.
Put everything in order before you start because the profit is huge.
Are you ready to go to the next level with us through our Website Crowdfunding Campaign?
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As we remain focused on bringing you fresh information in the digital space.
If you follow this guide you’ll be on your way to successfully fundraising for a business project.
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Elivechat Team
This is very informative, indeed crowfunding can be very beneficial if done properly.