When the best business loans feel out of reach, crowdfunding can be a reasonable alternative. However, crowdfunding success is sometimes easier said than done. How do you persuade customers to fund your campaign when they have so many other ways to spend their money? Luckily, previous crowdfunding success stories offer insight into the steps you can take to improve your campaign’s chances of meeting its goals. Funding your business’s growth could be as easy as following in the footsteps of others who have done it through crowdfunding.
How crowdfunding works
In crowdfunding, you add the details of your project, including why you’re seeking funding, to a publicly accessible crowdfunding platform. This platform is typically a highly user-friendly, easily navigable website from a company dedicated to crowdfunding campaigns, such as Kickstarter or Indiegogo. The tools you can access upon login make it easy to explain your project and its appeal. The crowdfunding page for your campaign clarifies your project’s value to potential funders.
Anyone who encounters your crowdfunding campaign can contribute money to your project. These contributors are often known as “investors” in crowdfunding lingo. You’ll often entice these investors more strongly if you offer them equity (public shares) in your business. This tactic is known as equity crowdfunding.
Did You Know?
Through equity crowdfunding, your average customer can become a micro-shareholder in your business. This means your customers become as financially invested in your business as they are emotionally invested.
Alternatively, you can offer your investors tangible rewards for their contributions. For example, let’s say you’re crowdfunding a board game you hope to design, manufacture and sell. In that case, there may be the expectation that you send the game, once manufactured, to people who contribute more than a certain amount. For pretty much all campaigns, branded merchandise can be a great investor reward.
You’ll send rewards only if your campaign is successful. In some models, success means meeting or exceeding your fundraising goal. If you miss the mark, you’ll refund all your investors and not send them their incentives. Assuming a successful project, though, you’ll get all the money pledged to you, minus the fees the crowdfunding platform takes to fund its operations.
How to run a successful crowdfunding campaign
Here’s what the experts had to say about running a successful crowdfunding campaign.
1. Set a clear goal.
Setting a specific goal for the amount of funding you need to raise is one way to get backers on board. Make sure your funding goal is realistic, however.
“People will be more willing to get behind your project if they can see the finish line,” Siva Mahesh, CEO of Dreamshala, told Business News Daily.
2. Seek help from experts.
“The biggest tip and most important element for a successful crowdfunding campaign is to not do it alone,” said Brian Hooks, owner of Left of BANG Entertainment. “Find a company or individual that specializes in crowdfunding campaigns. They will ensure you check off all the boxes needed to build a strong campaign.”
It’s also important to pick a reputable crowdfunding platform that is dedicated to helping you get the funds you need. Although Kickstarter is typically your best bet, you can consider Kickstarter alternatives as well.
3. Tell your business’s story.
People want to know whom they’re giving their money to and why they should care. An authentic and memorable anecdote can go a long way. Unprecedented hardship has hit many small businesses, and it’s important to be honest and express your needs.
Mahesh said you should explain the story behind your business and why it’s important for you to have these funds. “When creating a campaign, it’s essential to be as detailed as possible,” Mahesh said. “People want to help but might be hesitant if your story is unclear. Be genuine and transparent.”
4. Create a promotional video for your campaign.
Videos perform much better in terms of audience interaction than infographics or images do. A good video with sounds and narration will help pull donors in and be an effective marketing tool for your campaign.
However, before you put your video out there, get feedback from your peers, advised Yaniv Masjedi, chief marketing officer at Nextiva, a business phone company. “Make sure that before the video goes out to market, it has virtually no lapses or boring parts.”
5. Use your email list to promote your campaign.
Email your customers about your campaign, and include everything they need to know to participate. Shooting an email to your contact list with the link to your campaign is a direct and effective way to get loyal customers to participate in your fundraiser.
6. Leverage your network.
When you’re crowdfunding, you should use every inch of your network, said Kimberly Smith, growth marketing manager at Audicus.
“Ask your client base, family, friends and community to share your campaign amongst their own networks,” she said. “Using your network to access the networks of others will help build momentum and awareness.”
Even if people who come into contact with your campaign don’t donate, they can share it with their friends, which could be just as valuable. This brings visibility to your campaign from people who may not be familiar with your business, which can boost participation.
7. Use social media, especially LinkedIn, to reach out to other business owners.
Instagram, Facebook and Twitter are typically considered the big three social media platforms for marketing your business. However, if you’re running an equity crowdfunding campaign, it’s important to promote your fundraiser on LinkedIn too, because it’s a great space to pitch to a pool of business owners like you. The audience on LinkedIn is likely to be more familiar with your struggles as an entrepreneur and to understand the amount you’re asking for to cover business expenses, which can lead to an increase in support.
Smith said sharing your campaign on social channels is crucial to building visibility and awareness.
“Small business owners using this tactic should make participation as easy as possible for prospective donors,” she said. “One of the best ways to do this is to link the crowdfunding campaign to social posts.” Then, your audience has to swipe up or click to be directed to your campaign page, where they can donate.
8. Familiarize your audience with the crowdfunding site you’re using.
A confusing platform with a challenging interface is the best way to lose a would-be donor. In your communications about your fundraiser with potential backers, you don’t have to give a detailed breakdown of how to use GoFundMe or Kickstarter, but your campaign promotion should include details about the platform you’re using. Talk about its security and how backers should use it. This information will help donors feel comfortable about using the platform to invest their money in your business. [Want help choosing the right small business loan for you? Check out our buying guide.]
9. Offer tiered incentives.
Give your donors and backers rewards based on the size of their donations, and make sure they’re worthwhile. An attractive incentive will encourage more people to back your campaign. Smith suggested raffling off products or offering discounted memberships to your service.
10. Keep your audience up to date.
You want to keep participants and potential backers engaged in your fundraising journey, so it’s important to update them on your progress regularly. Sharing your growth monthly or even biweekly, depending on the length of your campaign, will help keep your fundraiser at the forefront of your audience members’ minds, said Will Ward, co-founder of Industry Arabic.
Key Takeaway
If you want to use a crowdfunding site for your business, share your story and fundraising goal with your audience. Use email, your network and social media to reach potential backers, and offer incentives based on donation amounts. Update backers on your progress regularly, making them feel like part of your fundraising journey.
Crowdfunding success is right around the corner
All of the above steps you can take toward crowdfunding success are pretty straightforward. Taking the time to plan out how you’ll approach each step and then acting on your plan can get you the funding you need. And once you’ve successfully crowdfunded a campaign, other types of business success become much easier.
