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This article is an introduction to something you may not have heard of before — crowdfunding. You’ve probably heard of “crowdsourcing” which uses the wisdom or power of communities and crowds to do design, solve problems, fund projects and even make small loans to third-world businesses. And now, with a recent change in regulations, you can actually crowdfund you business.
This is a very exciting development in the world of small business. And our most recent expert, Juan Carlos Martinez, is going to outline exactly how to be most successful inside this new space for small business success.
At the heart of any business plan is the marketing strategy. It defines your specific business revenue goals, your customers, how you plan to target them, your competitors and how your business differs. A marketing strategy should also spell out how your business is going to serve an unmet or underserved market. The importance of a sound marketing strategy is not only important to your overall business plan but also serves as the foundation for a crowdfunding campaign.
Crowdfunding is raising funds to finance your venture by reaching out to potential investors online. The Jumpstart Our Business Startups Act (JOBS) brings a new form of crowdfunding to the table. Investment Crowdfunding offers small businesses additional financing options by offering equity in their business to individual investors. Although, Investment Crowdfunding is not yet fully available it is anticipated to be an option later this year or in early 2013.
Traditional crowdfunding campaigns often offer ?trinkets? instead of equity. For instance, in exchange for investment investors may be offered early access to a product, deep product discounts, access to an invitation-only event or a free branded t-shirt. In Investment Crowdfunding, the giveaways disappear and the investors instead enjoy equity in the business.
In essence, a crowdfunding campaign is preselling your idea or product. In many cases, the world may know nothing about your business so it’s your job to garner enough interest to validate your project and gather enough funds in the short timeframe of your campaign. This is where a solid marketing strategy really helps ensure your success.
Elements of a marketing strategy that are key to your business plan and crowdfunding success include:
A Clear Message
Like a marketing campaign, a crowdufunding campaign must clearly and simply explain what your business or product does. A crowfunding pitch needs to quickly grab a potential investor?s attention and explain why potential investors should invest in your concept. Often the first part of any crowdfunding campaign is educating your potential investors on what crowdfunding is. Never assume they are already familiar with the platform. A crowdfunding campaign needs to have a clear to call to action just as you would with any marketing campaign.
Reach Key Audiences
Define the markets you want to reach and get the campaign out to them using the appropriate marketing channels. Strive to make your pitch personal and relevant to each member receiving it. Taylor pitches to fit the audience. A personal approach may be appropriate for people you know personally and have a relationship with. For others that you know through referrals or lead generation campaigns, a more formal request and introduction may be required.
Short and entertaining videos that tell the story of your venture are an effective way to reach potential investors. Videos should share your vision, dreams, the reason for being and goals behind the project and why it makes sense for investors to get involved. Use social media, e-mail and other marketing channels to get the word out about your campaign. Treat a crowdfunding campaign with the same focus and attention as you would a new product launch.
A business or product is often successful because people believe in the people behind the ideas. The ability to sell yourself is critical in implementing a successful crowdfunding campaign. Make investors want to invest in you. Prove to them that your project is worthy of investing in. Give them the opportunity to believe in you and that their dollars will help them be a part of your success.
In essence, crowdfunding is marketing. A properly executed campaign can generate enough money to turn dreams into reality and help a new venture get off to the right start.