Starting your own business begins with having the financial capacity to ensureyour plans come tofruition. This is the first step in any business— raising money to fund your ideas. While some do it through bank loans by putting up a good collateral, others just don’t have what it needs to secure a loan. Instead, they use their own savings, credit card, orborrow moneyfrom family members. But what if all these means are out of one's reach?
By definition, crowdfunding is“the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.” There are severalkinds—rewards, charity, debt, and equity crowdfunding.
Among the four, reward-based crowdfunding is the most common. Here, "backers" or investors receive rewards based on the amount of fund they guarantee. These rewards are often in the form of service or product they offer. For instance, a jewelry designer may offer her jewelries in return for money exchanged for her business venture. Top platforms for this type ofcrowdfunding include Kickstarter and Indiegogo, to name a few.
Now that we've learned the basics, we can proceed to ask the question that is begging for an answer- how exactly does one grow his small business through crowdfunding?
Consider these foureasy steps:
1. Make sure you have an impressive and compelling pitch that would make your potential investors believe that your product or service is worth their valuable time and money. Include an entertaining, informative, or moving video about your business model. Remember that as early as this stage, your sales pitch can make or break you.
2. Use social media for publicity. Twitter, Facebook, Instagram, and blogs are all available at your disposal for you to maximize your reach. Social media marketing will play a vital role not only in attracting potential investors for your fund campaign but also in enticing potential customers or your target demographic. Keep in mind that even great products and established companies still do marketing because products cannot sell themselves.
3. Know what type of crowdfunding is right for your campaign. In order to do this, you must understand your platform well enough. This is as important as knowing the current stage your business is in. This way, you will be able to utilize crowdfunding to its full potential.
The right type of crowdfunding will address the specific needs of your campaign or product, not to mention help you in your small business profitability and growth. For instance, if you already have an establishedbusiness, you can use equity crowdfunding to increaseyour debt financing. This will enable you to pour in additional stocks if need be.
Small business profitability may seem to such a daunting task, but with the rightapproach coupled with unparalleled dedication, it is easily achievable. Crowdfunding has made a lot of successful entrepreneurs shinethroughout the years, proving that success is within one's reach if only heknows how to make good use ofthe resources around him.