The thing I love about Crowdfunding is that is serves so many purposes at once. Of course the purpose I like the most is sales!
What is Crowdfunding
Let me back up for a moment and make sure all of you know what crowdfunding is. Crowdfunding is a way to fund a business or a project when traditional sources of funding may not be available. You get small amounts of money from many people. The internet has enabled this practice by providing a platform for people to promote their projects and attract interested parties.
Wikipedia’s definition is:
Crowdfunding describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations. Crowdfunding occurs for any variety of purposes, from disaster relief to citizen journalism to artists seeking support from fans, to political campaigns, to funding a startup company, movie or small business or creating free software. Another aspect of crowd funding is tied into the Jumpstart Our Business Startups (JOBS) Act which allows for a wider pool of smaller investors with fewer restrictions. The Act was signed into law by President Obama on April 5, 2012.
I’m Jazzed About Crowdfunding
The reason I am so jazzed about crowdfunding is that many small companies can get the funding they need. No matter how much they can sell they still may need capital to get to the next level. When the banks aren’t lending and the amount they need is too little for a venture capital firm to be interested where do they go? Well, usually it is to friends and family but if they had a broader reach they might be able to raise enough. Crowdfunding allows for that.
Companies who are starting up or companies who have been in business for many years but have a new product or direction can equally benefit from crowdfunding. What’s great is that if you do it right you have a great forum for marketing and selling your product before it is even launched.
Crowdfunding is Selling
I always recommend companies increase their sales to their delivery and manufacturing capability but we all know that at times the profit from sales can’t fund the needed growth or launch a new product. A source of revenue is needed and if you are good at selling you can be good at crowdfunding.
Crowdfunding is really just selling. You decide what you selling – a non-profit project, a new product, a book, a movie or an album. You prepare your promotional materials which is your story, your business plan and a video. You decide what you will give in return for the money you need. You target your “crowd” and market to them. You are selling them on your idea so that they will give you money up front before you have produced anything. If they love your idea they will tell others and direct them to your project.
How Do I Learn About Crowdfunding?
There is plenty to read on the internet about crowdfunding and there are many crowdfunding websites you can use to sell your project, in fact there are about 450 of them. Choose carefully. Crowdfunding is now a multi-billion dollar industry.
If you need money for your business, research crowdfunding to find out if it is right for you.
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