Crowdfunding…or how to raise money from complete strangers??

Do you need to raise funds to get your idea off the ground? Or, do you have a brilliant idea that you think will make your business more profitable, but your bank lacks your vision and refuses to give you a loan?  Perhaps you reached out to friends and family, but for whatever reason they said no. Is this the end of your business idea.  No, it doesn’t have to be.  Social media is changing more than the way we market and communicate… It’s changing the way we raise capital by doing CROWDFUNDING.

Crowdfunding pulls together a community—tightly knit or disparate—to fund a project, business or cause, usually via the Internet.  It builds upon the idea of crowdsourcing or the act of outsourcing tasks, traditionally performed by an employee or contractor, to an undefined, large group of people or community (a “crowd”), through an open call. Many crowdfunding websites are popping up that connect entrepreneurs with investors, producers with patrons, and causes with contributors.

Potential patrons can review the many pitches listed on the site and decide if there are any they’d like to support. On most crowdfunding sites, people are not investing in the project or business; rather, they are funding it. They are rewarded if the project comes to fruition, but don’t end up owning any part of the business or project.

This is in part due to U.S. regulations currently under review by the SEC so this may change in the near future. However, different sites have different rules, especially those based outside the U.S., so if you start a campaign make sure you review the terms and conditions of the site carefully!

Here’s how you start:

§  Create a pitch that clearly describes your project,

§  Specify the rewards patrons will receive if the fundraising is successful,

§  Create a funding goal and a timeline.

Each site has specific rules.  For example, there are sites (like Kickstarter) where you only get the money if you reach the goal within the timeframe you set out.  Other sites l(like IndieGogo) gives you the choice of taking the money as it comes in to use for your project or to take the money only if you reach your goal.

Also depending on the site you use, your campaign is connected to a PayPal account where the patron can make the donation.  If you are only taking pledges they are made with a credit card and the card won’t be charged until the project is successfully funded.

How do you get your projects noticed… and funded? A quick perusal of the crowdfunding website will show you that there is a lot of completion to attract people to specific campaigns.  You really have to make your campaign stand out from all the others.

Here are some tips on how to put together a successful crowdfunding campaign.

CHOOSE THE RIGHT CROWDFUNDING SITE:  Although there’s plenty of overlap in many of the crowdfunding sites out there, each caters to a specific audience.

Ø Kickstarter and IndieGogo attracts creative people who want to fund a project like a movie, a theater production or art exhibition. 

Ø ProFounder is great if you are an entrepreneur and starting a more traditional business

Ø Buzzbnk and 33needs are good if your idea has a social bent

Ø CauseVox and FirstGiving are specific for non-profits

Ø AppBackr focuses exclusively on the mobile app industry

KNOW YOUR TARGET AUDIENCE:  The key to raising money for your crowdfunding campaign is to engage your target audience to the point that they want to give to the campaign and help you make your dream a reality. This does not mean  to beat random people over the head constantly saying ‘give me, give me, give me’! That strategy doesn’t work unless you have a target audience plan.  You must have  an extensive email list of at least 1000 people, a large facebook fan base, and a long list of followers on Twitter. Your staff must also have great lists of contacts and people following them.

Many of the successful projects on crowdfunding sites target a specific, narrow audience. The target audience might be focused in a geographic area, religious in nature or share a common background.

PLAN AHEAD:  A crowdfunding campaign can go by very quickly.  Data from most sites show that the vast bulk of backers give at the very beginning and very end of a campaign.  This  makes sense…it is  exciting when it’s new and the excitement grows when it’s down to the wire.  If you have updates prepared for the campaign prior to its start all you have to do is consistently post them throughout the campaign.  Also have email responses and thank you(s) ready so that when someone contributes or pledges you can immediately send it off.  An immediate thank you goes a long way and probably will motivate the patron to tell others about your campaign.

In the future, I’ll be sure that I have emails written specifically for the beginning, middle and end of a project so that I can keep it active. When a project does take off it can be kind of overwhelming to respond to everyone quickly enough, so FAQ-type emails that are pre-written help a lot too.

CREATE A PASSIONATE PITCH:  As the saying goes, “you only get one chance to make a first impression.” It is even tougher on popular crowdfunding sites where there are 30 other projects simultaneously trying to make a first impression on the same page.  Create a compelling name, description and an image as part of your project to help you stand out. A video is critical, too.  People love to see things in action

HAVE A PLAN FOR SPENDING THE MONEY:  No matter how great your idea is, most people want to know that you’ve got a plan that will get you there.  You need to have a detailed explanation of how exactly you’ll be using their money and keep all costs transparent. This will build trust in you and credibility in your project.

LEVERAGE YOUR SOCIAL NETWORKS:  It’s important to realize that most of your audience may not be familiar with crowdfunding. Chances are you’ll need to use social media, email marketing and other communication tools to drive your community to your project at a crowdfunding site.  Having great lists and networking is essential.

BREAK BIG PROJECTS INTO SMALLER ONES:  None of your potential patrons are likely to drop $100,000 on your next big thing. Your project has a better chance of reaching its funding goal if you break the project into smaller, bite-size pieces. You might break your video into filming, editing and distribution. Rather than trying to raise enough to start a business and make payroll for two years, start by raising enough to build a prototype of that solar-powered toothbrush you’ve been dreaming about.  People like to feel like their contribution is going to make a difference. Fifty dollars makes a bigger splash when you’re raising $1,000 than when you’re raising $10,000.  Smaller requests seem more attainable, and people want to feel like they’re on a “winning team.”

CREATE COMPELLING REWARDS:  Put thought into rewards because people like to receive something.  Be creative.  If you are writing a book offer to list them in the acknowledgements if they donate a large amount.  Smaller donations could have more standard rewards.

TREAT YOUR CROWDFUNDING LIKE A CAMPAIGN:  Pitching the project is just the beginning, not the end, of the work. You need to continually drive people to your project page. Many crowdfunding sites use traffic and early success as indicators of which projects to feature. IndieGoGo states that 50% of deciding who gets featured comes down to “page views, number of funders, % of goal completed.”

TELL A STORY AND THAN ASK FOR THE SALE:  Be creative and have lots of updates.  Insert photos, blogs, videos, and testimonials.  Make sure people know who you are not just about the project.  Make sure you are visible within the campaign.

GIVE CREDIT WHERE CREDIT IS DUE:  People love to be acknowledged. Whether it’s on the liner notes, film credits or etched into the wall in your retail space. Let people know how they’ll be credited and follow through. It gives you a great story to tell and builds your base for your next crowdfunded adventure.

Successful campaigns require passion, a clear vision and a strategic plan that can be executed. You’ll get the most activity at the beginning and end of your campaigns, but you need to be working for your goals throughout.

Have you financed a project through crowdfunding, or are you planning to do so in the near future? If so, please share the details 

How Much Time Do You Spend Online Each Day?

How much time do you spend online each day? 

If you do any marketing or professional promotions on line you know how time consuming it is.
 There is daily content to read about your industry and competitors, blogs to read (and write), Facebook posts, tweets to scroll through, and news sites to read. That is in addition to hundreds of emails that hit your inbox daily.  Sometimes it seems impossible to keep up with all the social media and technology that is essential if you want to be up to date with the latest business technology and use it to market your business. 

Many business owners are hiring staff to maintain their online presence and to keep their business relevant in the online world.  Others set aside a block of time each day to spend in the virtual world business world.  One thing is certain, in order to do business in the new economy you have to understand and be part of the ever- changing online world.

Here are some of the best sites to use to market your business and organize your on line presence:

§  Google+ Business Pages:  An excellent place to share new things that your are doing and to promote your business. Put the +1 button anywhere you'd like people to be able to recommend your business, products or services to friends and contacts all across the web.

§  Twitter:   You might already occasionally tweet about something happening during your business day, but did you know that your Twitter stream (those you follow) is an excellent way filter out the best blogs and articles.  By following people who are tweeting relevant information you have a constant stream of information including data and links to articles.

§  Twitter lists and Tweet Deck:  This is a dashboard application for managing your Twitter and Facebook accounts. Using columns to focus on the people that are tweeting out relevant information in your field you can find the information you need in a glance.  Remember to keep your lists short (no more than 75) with only the most informative and relevant sites.

§  Scoop.it:  Will identify great content that matches the interest of your audience.  It will  “scoop” articles from around the web that are relevant to my specific topic. Scoop.it  will send a daily email with a summary of some of the new articles uploaded to the boards you follow. If you only have 30 minutes each day to read the latest news in your industry, start with Scoop.it; it serves up the newest information in a very readable format.

§  Delicious:   This site will bookmark anything on the web that you want to remember and go back to. You can follow users or “stacks” (content-specific bookmarks) or search for information by tags.

§  Pinterest:   One of the newest social media platforms, it has become extremely popular very quickly.  If the content you want is visual, this is an ideal platform for you. You create topic specific boards and then pin relevant information to the board.  It seems everyone is using it.

§  Buzzfeed:  This is one of the hottest sites with the most social content on the web. They feature breaking buzz about the kinds of things you'd want to pass along to your customers and friends.  It is a great place to post your blog or new information about your business.

Is Your Business Ready for the Economic Recovery?

With all the recent talk that the economy is well on its way to recovering is your business prepared for the new economic world that is evolving? Are your products and/or services still relevant?  Will your consumers be the same?  Will they be willing to pay the same price for your product that they did during boom times?  Can you produce your product in a simpler (and cheaper way)?  Do you need the same staff?  One thing you can be sure of is that business after the recession will not look the same as it did before.

Most businesses spent  the recession whining and complaining…few business owners prepared to start off running when the economy improved. Now that hopefully there is light at the end of the tunnel, it is the ideal time to tune up your operations. Don’t waste this opportunity. If you want to be ready for the recovery, the time is now to simplify, streamline and optimize your business in preparation for the future.

Step 1: Review and Simplify


§  Industry Review:  Over the last few years your industry might have changed.  Get up to date on the new innovations and make sure that your product (or service) is up to date and competitive.

§  Business Plan Update:  Review and update you business plan so that it reflect the new business environment and changes in your industry.  It is important to update your financials so that they reflect losses that you might have incurred during the recession, updated costs and new pricing.

§  Staff Review:  So you kept your staff during the recession and they stayed with you through thick and thin, but can you sustain your business in the new economy with the same number (and kind of staff).  Do you need a new skill set of people?  Can you produce your product or service with fewer staff?   Who on your staff produces and is part of the team?  Who is innovative and can adjust to new ideas and methods.  It is best to make the hard decisions now and get a head start to profitability than to wait until it is too late.

§  Reduce Clutter:  Over the years, every business collects clutter: unused materials and machines that muck up daily operations. Do a thorough spring-cleaning. Go through every nook and cranny in your office or workspace.  Throw out anything that is out of date or unused. Organize what’s left so anyone can find it when  they need it. Label the location of all materials and organize files making them easy to find.

Step 2: Streamline


§  Eliminate Unnecessary Movement:
In any business, walking is waste. Unnecessary movement of people, machines or materials is wasteful and slow. Reorganize the flow of work to eliminate unnecessary travel.

§  Eliminate Unnecessary Delays: Remove the delays between steps in the workflow. In most businesses, the product or service spends 57 minutes out of every hour waiting for the next employee to do something with it. When you look at the total time from order to delivery, employees are only working on the product or service for three minutes out of every hour (the 3-57 rule). When businesses eliminate the delays between steps, they can reduce turnaround times by 50% or more, double productivity and increase profits by 20% or more. Companies that eliminate unnecessary delays also grow three times faster than their competitors.

§  Eliminate Unnecessary Delays:  The mistake most managers’ make is looking at their employees and thinking they are busy.  And they might be but are they working towards producing and delivering the product? Eliminating unnecessary delays makes the company faster and more efficient, delighting customers. More importantly, they will tell their friends. Nothing beats word-of-mouth to grow a business.

§  Eliminate Unnecessary Inventory: Excess inventory cuts into your profitability. Raw materials and finished but unsold goods take up space, time and money. In most businesses, some level of inventory is necessary, but companies often stockpile materials they rarely need. Get a handle on how much inventory you need to function efficiently and get rid of what you don’t need.

§  Shift to One-Piece Flow:
Most of us grew up learning about mass production and the economies of scale. While useful at the time, the long recession has taught us about economies of speed. If a customer only wants one of your products, it doesn’t matter if you can produce 10,000 quickly. They still only want one and you end up with 9,999 in inventory (remember excess inventory is bad). Figure out how to redesign and reconfigure machines and processes to produce one item or one thousand quickly and easily.  Simplify your operations so that you can flow from producing small to large amounts easily.  This simplifies production scheduling and reduces delivery time.

Step 3: Optimize


§  Count and Categorize Mistakes and Errors: 
When businesses take the time to count and categorize their errors, they quickly discover where most of the errors occur. The employees who work in that area can often figure out a way to mistake proof the process to eliminate most of the errors.  It is helpful to frequently review methods and goals to see what is working right (and wrong) and what goals you are achieving.

§  Mistake Proof the Process: 
Mistake proofing makes it impossible for an employee to make an error. Examples of mistake proofing surround us. Modern cars won’t start unless the transmission is in park, and the driver has a foot on the brake. Electrical plugs have a fat and slender prong so that people can’t plug them in incorrectly. A spell checker automatically checked my spelling as I wrote this article.

While the economic downturn has been painful, it has also given every business an unparalleled opportunity to simply, streamline and optimize in preparation for the recovery. Could you use this time to become faster, better and cheaper than the competition? When the economy recovers, will you be ready?  Need help in preparing call BizBuilding today….201 914-2737!