In today’s uncertain economy, managing your small business means understanding how to stay financially solvent even when institutions are hesitant to give you a loan. Over the last few years, crowd funding has become an increasingly popular option for many entrepreneurs. According to the “Crowdfunding Industry Report” published by Crowdsourcing.org, $1.5 billion was raised through the strategy during 2011, with most of the money being raised in North America. Unfortunately, asking consumers for capital isn’t as simple as putting your hand out. Consider the following best practices if you want to launch a crowd funding campaign for your small business.
Start with your customers and associates
The people you already know are the ones who are most likely to donate to your company. The National Federation of Independent Business recommends reaching out to associates, friends, family members and customers.
“If you’re in business already, your existing customers are most likely to support you.” Joel Nied, an attorney, told the news source.
Don’t expect charity because patrons are familiar with you and your company – you must provide an incentive. Promotional discounts and giveaways can go a long way toward motivating customers to become donors.
Scale the rewards
It isn’t easy to convince people to part with their money, even if you’re offering prizes. If you don’t have multiple rewards based on how much someone donates, then it’s unlikely that they’ll give more than the minimum. Donors who provide more funding deserve larger gifts than others. According to Entrepreneur Magazine, you must create different levels of donations and prizes to maximize contributions. Even a small incentives like email updates about your crowd funding campaign can foster loyalty among your customer base and motivate donors to give even more.
Find the right platform
The number of crowd funding platforms has proliferated in recent years. Kickstarter and Indiegogo are probably the most famous sites, but there are other options available. There are some sites designed specifically for entrepreneurs and others for niche markets. According to Forbes, you should use a secure website that appeals to your target demographics. The news source notes that different platforms attract different donors, so you have to find one that meshes with your business. Additionally, ensure that your customers’ information will be protected by picking the most secure option because cyber security is imperative to most consumers.
How would you go about crowd funding your small business?
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