Building Your Brand With Crowdfunding

06/18/2015 10:04 am ET | Updated Jun 18, 2015

2015-03-12-1426186794-1956311-AmandaBarbara.jpgAuthor 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.
However, while crowdfunding delivered great benefits for Bluff Works, it requires a certain level of finesse and should only be set in motion when the time is right. Determine whether you're ready to crowdfund by asking yourself these questions:
  • 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.
The biggest mistake made by entrepreneurs is attempting to crowdfund before establishing logistics. Without these details, people won't pledge support. On the other hand, if you start too late, you'll miss the chance to convey urgency and exclusivity to potential investors.

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:

  1. 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.
  1. 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.
  1. 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.
  1. 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.
For example, the ethically focused outdoor apparel company Appalatch aimed efforts at raising profits and awareness. The founders initially launched their campaign on Kickstarter to buy a cutting-edge knitting machine, but the campaign was shared worldwide, raising more than $55,000. This not only grew the company, but it also advanced the ethical principles behind the brand.

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.