Posted by Lynsey Sutherland on 06 February 2015
Always wanted to harness the power of your passionate audience? Crowdfunding for business could be the perfect way to take your idea to the next level.
Appeal to the crowd
Crowdfunding is a relatively new way for businesses to find the investment power they need. And a significant number of businesses are turning their backs on traditional investors and loans in favour of crowdsourcing the resources they need. In fact, according to Entrepreneur, the crowdsourcing economy has more than tripled in the last three years.
Setting up a crowdfunding campaign is surprisingly easy – the real skill comes in creating a campaign in which people will willingly invest. But going into a crowdfunding venture without an ironclad plan is a bad idea, as a failed attempt can really count against you.
Pick your playing field
First, there are loads of crowdfunding platforms to choose from, and it's important to pick the right site for your venture. There's no point taking your brilliant business idea to a site aimed at artists and musicians – you're better off using platforms like Fundable or VentureCrowd.
Tell your story
Next, you need a compelling story to tell. Businesses that can persuade people to put in a stake are the ones that engage people from the word go. Highlight the areas that make your business different, dream up desirable rewards for your investors and always look for new ways to be inclusive.
Do your sums
Undoubtedly, all your business plans will be under intense scrutiny if you embark on a crowdfunding campaign. You also need to understand that if you are successful, you must be able to fulfil your obligations. Check out the Business Victoria website for some good advice regarding tax registration, loans and equity for crowdsourced money.
Build some starter interest
Few people are willing to be the first to step into untested waters, so collect a few starter investors ahead of time. This means that when you launch your crowdfunding campaign, you'll already have the kind of buzz you need to hit your targets.
If you’ve faced barriers to financial success in the past, crowdfunding has opened some exciting new doors for business. But don’t try to step through them without plenty of preparation – and a backup plan.