Startup owners…Did you manage to back your company with the proper funding?
If NO, there is a deep pit waiting for you that can make your business fall. Yes, cash management is a crucial aspect of any business and when it comes to startups, having some fundraisers at their back becomes the important factor of survival.
Crowdfunding is one such way that business owners adopt in order to raise funding for their business, so before we get into the tactics of making the funding process effective, lets first understand the terminology about what exactly the crowdfunding means.
What is crowdfunding?
Putting it into simple words, crowdfunding is the practice of raising funds for the organization by raising small funds of money from a large number of people, that collectively makes a huge investment for a project or venture to come into action or make success.
Business owners, start-ups and non-profit organizations adopt this technique by pitching and approaching on different platforms where the prospect investors get to know about this and will contact them to give their part of the contribution to the business growth.
These funds are then invested to achieve the desired goal and the earned profit based on the predefined deals are giving back to the investors in a specific time-span.
So now, hope you are clear with the terminology as we are straight away diving into its effective execution.
- Research the numbers well
Before getting into the process of crowdfunding, it becomes your responsibility that you have done your homework well. Study the statistics of the past funding in the field. Learn where and how much will you need to invest to make your idea a working reality.
Come up with some final figures and valid reasons to back up your process. Doing this process will help you define the range of investment based on which you can pitch the investors to get a good collective amount at the end.
- Choose the right platform
When you are talking about the crowdfunding, the platform where you approach makes a big difference in the response that you will get. Like if you are a non-profit organization or NGO, you need to pitch on certain platforms that help you get the donation from the people. Websites or certain social media accounts that help you get people who would like to do their money to the trust.
While on the other side if you are an entrepreneur or a startup, pitching on the crowdfunding websites that come up with the people who would be interested in giving the fund in equity or just get the investors for whom you can borrow the money with the promise of refunding with some interest money.
- Clearly defined business plans
Yes, this is the most important factor that will decide whether you will get the investors or not. Be very clear with your business plan, study and make an action plan about how you will make your business a successful venture.
Your investors will only be able to believe in your ideas if they see the potential in your business idea to gain some profit in the near future. But to get this, you first have to be very clear about what you are presenting and the realistic timelines and success rate that you are showing them to invest their money.
- Make your perfect pitch
Finally what matters to get a great deal closed is what kind of impression you leave on your prospects to get interested to invest their hard-earned money into your business idea. A business pitch is the one and the last way that can convince people to look at your business idea and believe that it is worth investing.
Be it a story, some numbers, facts that represent the success rate, the rough sketch of the final product how it will solve the day to day problems of people. The way you choose to represent your thoughts and business ideas are what you will get in return.
- Fully planned social media strategy
Branding is the other supportive actor that can help you get the attention of your prospective investors. Crowdfunding activity doesn’t really stops by just pitching your business idea. To get people knowing about your idea and how they can play a part by giving their small contribution comes with how well you are marketing your business plan.
Building a brand profile to make people aware of your business, and being active in different communities in the niche will help your business get the right attention that it deserves.
- Keep them engaged with rewards
Rewards are something that has always grab the attention of the people looking for it. This the easiest way to keep your investors engaged and build their interest in companies every up and down.
This reward policy runs on a specific target a company achieves based on the maximum amount the investor has invested to get it accomplished and thus gets a reward in the form of product or service and when the targets are achieved. This keeps investors happy by giving some goodies to keep-up their interest in the business.
There is no specific guarantee of the success rate for the crowdfunding process, but if you take the right steps by studying the strategies and knowing the secret of the people that benefited before adopting this process, then the chances of getting success increases gradually.
Taking the marketing, pitching and the skill of convincing hand in hand and following the above-mentioned strategies you are surely going to raise a good fund for your startup the next time you plan to execute your plan.
James Vargas is an experienced business expert, consultant, and manager at Get Everything Delivered, startup consulting services. He has 1.5-decade corporate experience and is tailoring the best project delivery practices to the start-up owners based on his knowledge to solve start-up business problems to great revenue for their business.