10 Effective Ways How Crowdfunding Can Turn Your Dream Into Reality
Do you want to raise money for your business? Crowdfunding is one the best options for turning your brilliant idea into successful business. It is a way of raising money from a large number of people like friends, relatives or others etc. There are many advantages of crowdfunding such as it will develop confidence in you, increase the chances of getting permanent patrons etc. You will also learn marketing techniques with the help of it. You will be able to connect with your seed investors by crowdfunding in a convenient manner.
How does crowdfunding work?
Crowdfunding is a new concept that is still progressing. It starts with pitching an idea, setting up a fundraising objective and time limit for raising money. Pitch is the first thing that perspective investors look for. If they found pitch impressive then they will support you. The investments are done through online platforms.
Types of crowdfunding
There are three forms of crowdfunding depending upon the kind of product and services offered by you.
As its name suggests, audience invests in business, venture or project in exchange for equity. In this crowdfunding, the supporters will get a share of profit in the form of distribution or a dividend. If you want to do equity-based crowdfunding, then you need to make executive summary containing details about your product and your strategic plan for developing business.
Rewards based crowdfunding
It is the best crowdfunding that attracts huge number of investors. The patrons will receive reward if they will give contribution in your project. Rewards are divided into three categories i.e. services, pre-orders and recognition. Out of these, pre-order is the most famous kind of reward.
Donation based crowdfunding
You can have an idea about this crowdfunding by its name i.e. the investors will invest money in your business for a social cause. They will not receive any financial return on their investment. You can give a ticket to an event, acknowledgements on an album cover, free gifts etc as a reward to them.
10 tips for making crowdfunding profitable
1. Do your research
There are many crowdfunding websites available over the internet. Out of these, you have to choose the best site. You must look at projects that are nearly same to yours and type of rewards given by the similar campaigns. You should also observe how they do marketing whether by videos or product demos or anything else. Each crowdfunding site has its own and regulations so you should also keep this thing in your mind before finalizing any website.
2. Creating an amazing pitch
You must have heard the famous saying “First impression is the last impression’’. So you should try to create an amazing pitch. You can get it done by including a captivating name, image and explanation in your project. More the interesting is your pitch; more number of people will invest.
3. Make a financial plan
Financial plan plays an important role in the crowdfunding. It is essential to make an accurate and very detailed plan for your campaign. You should ensure that you are able to fulfil all your promised rewards and will give it on time. The business should also run with the same amount as you decided before.
4. Promote your project
Promoting your campaign is very necessary to gain fame as well as wealth. There would be many people who might not be familiar with the idea of crowdfunding. This problem can be solved by advanced tech. As most of the people are active on social networking sites, you can promote your campaign on social media such as Facebook, twitter etc. Email marketing is another option for you to reach your audience in a fast way. You can also use other communication tools to drive the attention of your community towards your project.
5. Recognize the interest of people
You should try to know your target audience. It is vital to figure out whether people will take interest in your campaign or not. You may find your campaign idea excellent but is only of interest to you. Your strongest supporters such as coworkers, family members and others can also give you suggestions regarding your business.
6. Break up your project
It would be better if you will break up your bigger project into small components as none of your perspective investors will invest huge amount in your large size campaign. You may split your video into editing, filming and distribution. It is preferable to make payroll for two years and start up your business instead of spending time in raising venture capital.
7. Be grateful to backers
You must say thanks to that person personally also who give you even one dollar because there is a possibility that one-dollar backer can bring you a large audience and these people will help you in promoting your campaign to a great extent. You should also be grateful to your patrons as well.
8. Build trust
Winning trust of the people is vital to have a profitable business. Thus you should tell the people how they can be credited and follow through. It will aid you in your next crowdfunding project also. If you will do angel investing with your known people it will generate more credibility and profit.
9. Never stop promoting
It is often seen that most of the people are excited while introducing their project but lose their excitement in the last few days. This kind of strategy can affect your business. For instance, if there are 31 days left in launching of your project then you must promote your project for the entire 31 days. You should not stop promoting until the final minute.
10. Offer attractive rewards
Rewards are of great importance in crowdfunding. You should ask yourself how people can be made excited and react positively to your campaign. Attractive rewards will assist you in gathering huge audience thus leading to notable investors.
Have you got any other useful tips on crowdfunding effectively?
I’d love to hear some more useful tips. Contact me and let me know! I’d love to hear from you.