Crowdfunding is an alternative resource to consider for obtaining startup financing for your new small business. Crowdfunding is especially appealing to entrepreneurs who don’t have enough credit established to secure financing through traditional business loan avenues. If your small business is already operational, you may want to consider crowdfunding to secure capital to expand your business for example, if you’re planning on launching a new product or service or opening additional retail locations. While there are operational differences between crowdfunding websites, essentially all serve as social media platforms where you can pitch your business idea to the public to attract investors to give you the working capital you need. As crowdfunding has become more popular, there are a larger number of crowdfunding sites and more potential sources of financing. However, there is also increasing competition for the investor dollars available through crowdfunding sites. Follow these steps to maximize your chances of successfully raising sufficient financing.
Choose the Most Appropriate Crowdfunding Sites
As crowdfunding grows, there are readily available directories of crowdfunding sites. Find the site where your particular business idea is most likely to find favour. For example, the crowdfunding site MoolaHoop exists specifically to fund women entrepreneurs. Don’t waste your efforts posting campaigns on sites that don’t offer business funding or that only offer funding for specific types of projects.
Use Compelling Visuals
If you can do more to help potential investors clearly see your business idea’s potential, you’ll stand a better chance of attracting investors and securing the necessary amount of capital. It’s simple common sense that people can more easily envision your business idea with visual aids as opposed to just relying on your written presentation. If you don’t have the skills to create good photos or a video presentation, consider investing in the services of a friend or colleague who’s willing to help you out for a nominal fee.
Precisely Communicate About the Financing You Need
Don’t make the mistake of simply describing your business idea and then declaring, with no detail or explanation, “I need $10,000 to get started.” Potential investors want to see a more detailed explanation of why you need the financing that you’re seeking. Make a professional, detailed presentation of all your anticipated startup and initial operational costs, as well as projected revenues for at least the first year or two. Putting together a full explanation of how you expect to spend the financing you raise conveys to potential investors that you have a well-thought-out business plan rather than just a vague idea.
Leverage Social Media Contacts
Most crowdfunding platforms connect easily to the major social media platforms, such as Facebook, Twitter, and LinkedIn. Rather than just posting your business pitch on the crowdfunding site, publicize it liberally across all your social media networks. Your social media connections might be interested in financing your business but might not already active on or even aware of your chosen crowdfunding platform. Letting them know how they can help you launch your new small business may be all it takes to secure the financing you need.