One of the most challenging aspects of getting a business off the ground is funding. You can attempt to venture down traditional avenues to raise the money needed, but if you’re new to entrepreneurship, the odds of being able to secure funding through these channels is pretty slim.
In fact, 60 per cent of start-up entrepreneurs admitted to using personal savings more than any other source of startup financing.
So, what happens if you’re rejected by the bank, can’t bear the thought of filling out lengthy applications or are struggling to find a personal investor to believe in your project as much as you do? Previously, the temptation to shoot down your idea as an unfulfilled dream and give-up may have been very real – but I can assure you that it doesn’t need to be like that anymore.
How do you feel about the concept of ‘money you don’t have to pay back’? This is money that you can raise from the crowd – and probably from the people who your idea will impact the most – through running a Crowdfunder project. You can begin to make all of this happen in less than a minute, in your pyjamas and sat at the computer at 3am… if you so wish! No confusing loan application processes, no bank meetings and no unfulfilled dreams to see here.
Crowdfunding is a one of the UK’s fastest growing alternative finance options. It’s the practice of funding a project or venture by raising money from many people who each contribute a relatively small amount. Investors can be friends, family, customers, private institutional investors or complete strangers.
See also: Crowdfunding a UK small business – everything you need to know
Crowdfunding is a fantastic way to test your idea. A successful project proves there is demand for what you’re doing, and gives you confidence in your idea. Furthermore, crowdfunding is for life, not just for fundraising. The people who support you become your customers, volunteers and members. Your supporters take part in the journey, meaning they make incredible ambassadors for you in the future.
Running a successful crowdfunding campaign can help to unlock loans and investment or can be a pre-curser to a much bigger equity crowdfunding or community shares campaign in the future. It proves you know what you’re doing.
But change brings with it fear and often a misconception that crowdfunding is both complex and risky. This is simply not true. It’s a case of educating how crowdfunding could work for you and how to maximise your chance of doubling your money.
Five hacks for crowdfunding success
There are five simples hacks that businesses and project leaders can do to ensure their campaign ticks all the right boxes to raise as much funds as possible:
1. Look out for free money – There are many initiatives that might qualify for a boost from corporate or local council funds. Basically, if your project meets the criteria of the fund, it may get an additional cash injection. At crowdfunder.co.uk we work with many partners to ensure that projects on the platform can tap into additional funds and potentially get a splash of cash.
2. Identify a clear target audience – You will need to engage with your personal and professional contacts to make your project a success. Usually your friends and family will be the first to pledge – and it’s a good idea to line of up some of that funding before your project goes live.
The best way to start is to gather your team together and start drawing a map of your network. This network map will give you a much fuller picture of the shape and size of your crowd. Your unique network map will be the basis for all the key elements you’ll be creating next, so leave nothing out.
3. Present your story in an engaging way – When visitors land on your crowdfunding page, you need make a connection quickly and get them excited about your project.
To do this well you’ll need make sure your description is structured, concise and engaging. Add some images and testimonials to give it a professional-looking finish. Most importantly, utilise multiple touchpoints to communicate the existence of your project page to your audience, whether that be social media, press coverage or simply through your key network pillars as vocal mouthpieces.
4. Offer unique rewards and incentives – Rewards are a great way of increasing the amount of money a supporter will pledge as well as a great way for generating excitement around your project. Think about the kind of people who will be making the pledges and offer rewards that you yourself would want to receive.
5. Determine whether you have the necessary skills – Think about your strengths and weaknesses – are there any gaps in your own skillset that need to be filled? It’s a good idea to share the load then running a crowdfunding project and find people to help with specific tasks. It can sometimes feel like a lot of work for one person to do alone, so delegating can free up more of your time to focus on driving the project forward.
Run through the list of skills you need outsource and think about anyone you know who has experience or expertise in that area. The core team behind great crowdfunding projects is usually made up of two to five key people, so think about who you want on board and play to everyone’s strengths.
Once you’ve made it through your successful crowdfund, it’s time to pat yourself on the back and think about what’s next, but remember to thank everyone as loudly and publicly as you can. Most importantly, keep your backers updated with any developments, first, when they can expect their rewards and later how the business is progressing. Happy crowdfunding!
Further reading on crowdfunding
