Author Amanda L. Barbara is the vice president and co-founder of Pubslush, a global crowdfunding and analytics platform for the literary world.
Crowdfunding is more than a source of capital -- it's a tool to gauge consumer needs.
For example, Men's retailer Bluff Works set out to use crowdfunding to raise money and gained valuable consumer feedback in the process. The founder discovered that customers wanted black pants -- a color he hadn't originally considered -- so he modified his offering to fit their needs.
If you're starting a side project or an entirely new venture, crowdsourcing could significantly change your company's financial outlook and market presence in a refreshing way.
Timing Is Everything
There are a number of benefits to crowdfunding. Specifically, you can connect with your audience by:
- Generating buzz during the pre-production phase.
- Fostering shareability to build widespread interest.
- Creating urgency for people to endorse the project.
- Demonstrating marketability and an overall need for your business.
- Evolving an offering based on feedback and interest.
- Have I established a comprehensive business plan? You need to have realistic goals, accurate financial projections and solid value propositions.
- Is the project ready to be pitched to investors? If you don't thoroughly know all aspects of your business or industry, you're not ready.
- Can I clearly demonstrate ROI? Be prepared to explain how contributor funding will be used to implement plans, achieve goals and generate profits.
Build Brand Awareness
Crowdsourcing provides a personalized platform that offers a direct connection with consumers. This audience believes in your concept, so capitalize on that by asking them to share your project's success while simultaneously building your brand.
To maximize on these potential ambassadors:
- Focus efforts on building total support. Reward supporters with exclusive benefits and incentives to help the process and increase your reach, but make sure your incentives are realistic and affordable. You don't want to offer a reward for $100 that will cost you $95 to fill.
- Establish an engaging social media presence. Make people want to learn more by showing uniqueness and creativity to differentiate your brand. Use facts, questions and quotes to entice people to check out your campaign rather than shamefully solicit support.
- Involve supporters throughout the project. An involved contributor is more likely to donate and share because she feels like part of the team. Make sure you keep your supporters in the loop on your company's progress.
- Don't focus solely on larger platforms. There are platforms specific to different types of projects. Find a niche social outlet aimed at your audience and equipped with a funding model that suits your needs.
Crowdfunding builds an investment model that combines the best aspects of entrepreneurship and social awareness. If your startup is ready to move toward procuring financial backing, a well-designed crowdfunding effort will draw a wide range of people who could expose your company to like-minded new audiences.