All around the world people have been using these current uncertain times to their advantage and seizing the opportunity to start their own business online. But not everyone has the capital to make their dreams happen. If you’re trying to launch and scale a start-up, you might have considered crowdfunding. But is it right for you? Here’s our guide to making it work in 2021.
When crowdfunding first came out, the novelty helped plenty of early ventures to succeed where they otherwise might have failed. But now, potential investors have seen countless pitches – so you’ll need to make sure yours stands out from the crowd. One of the best ways to do this starts at the drawing board: if you develop a product or service that fills a specific gap, you’ll have a ready-made audience to market to. If you can get people excited about what you have to offer, then, you’ll be starting off on the right foot.
Once you’ve got a one-of-a-kind business idea, though, you’ll still need a decent crowdfunding campaign. And although it’s far from the most fun part, a vital step along the way is to ensure that you’ve properly planned. A common mistake is to not consider the cost of delivering rewards when setting your funding goal – so make sure that you take everything into consideration.
Speaking of perks and rewards, these are the hooks that will turn your audience into investors – so make them count. Fortunately, that doesn’t mean that you need to blow the budget. Common low-tier rewards often include public acknowledgment, such as a name printed on a label or displayed on a plaque, or a thank you in the form of a postcard or a card. For the higher tiers, it’s a great idea to offer branded products such as t-shirts or tote bags. For the backer, they get the pride of showing off their support of a new business, while you get free advertising thrown into the mix.
Another option is to offer pre-orders of your product as one of the rewards in your campaign. Not only can this help to raise much-needed funds, it will also give you an insight into the market demand as well. Meanwhile, at the higher end of your perks scale, opportunities to interact and collaborate with your business often attract big investors – as do exclusive experiences and events.
Hopefully, your campaign will be successful – but your work doesn’t end there. Now, you’ll have to successfully deliver on what you’ve promised. Whether that’s pre-orders or physical rewards, make sure that everything is dealt with swiftly and smoothly, with clear communication throughout. This is where good financial planning comes in: if you’ve thought things through properly, there shouldn’t be too many hiccups when it comes to making your business a reality.
Finally, remember that your backers are your first supporters – so treat them well! Behind-the-scenes photographs, updates, news and thank you messages are all great ways to keep them engaged with your project, building positive word of mouth around your brand before you’ve even begun.
Here are the UK’s top 10 crowdfunding sites.