The business world can be a vicious place. To get your idea off the ground, you have to perfect it, advertise it and make sure that people know about it. But how do you get people to pay to learn more about your product? You need funding!
Enter crowdfunding, a way of raising funds from the general public in order to help cover the costs of starting or expanding your business. Crowdfunding is a great resource for entrepreneurs who are just getting started and want funds to help them build their product without going through costly corporations or banks first (like if you are trying to create an app).
Crowdfunding is easy to set up, run, and maintain. First you need to create a platform for people to pledge funds. These “slots” or spots can be purchased by individuals or businesses and if you reach your goal, you receive the money.
But what about failed projects? There have been various studies done on the overall success rate of crowdfunding. Kickstarter has reported that 44% of projects were successful in 2013 and the number has only grown since then. Indiegogo found that out of 2,429 projects launched in 2011 (their first year), only 493 reached their goal.
Do you know using the internet to get small donations from many people to start a business is called crowdfunding.
Here some points are discussed about CrowdFunding-
1. CrowdFunding is a good way to market your product.
You may have the greatest idea in the world but without marketing it no one will know about it. If you’re lucky, your friends and family will be interested enough to donate or buy your product but that’s not using the full potential of CrowdFunding.
To really get your idea out there, you need marketing campaigns that reach millions of people at one time, especially people who would use or buy your product. They say that you have to spend money to make money and this is definitely true when it comes to CrowdFunding.
2. CrowdFunding is a good way to raise funds.
Raising funds can be a challenge. If you want to start your own business, you would need money. You could ask a large company for funding but they are unlikely to help you and even if they do, they will most likely charge you a huge sum of money without wanting your input.
If you buy the product yourself, then there will be many expenses attached like the cost of creating the product and selling it and this is where crowdfunding comes in handy. Instead of buying all the equipment and paying for labor, you are asking for people to help fund your product. This way everyone benefits and you won’t have to keep looking for investors.
3. CrowdFunding is a good way to get feedback from different people.
If you want the public to fund your idea, they are going to want something in return. They want proof that it works first! By allowing them to see behind the scenes of how your idea is made and then getting their feedback on everything including the product itself, marketing strategies, your business plan etc. they will see that it is worth it. Crowdfunding can be very useful in this sense.
4. CrowdFunding is not a good way to make money.
When you ask for money from people, you are actually asking them to put their money behind the idea and the only way for them to get what they are expecting is if it works out in the end. If the project is not successful, then you would have failed to meet your obligations and most people don’t take that well. They are likely to sue or complain about you.
5. CrowdFunding is not a good way to get rich quickly.
If you really want to make money fast, there are better ways than crowd-sourcing funds online. It may sound like a stroke of genius (and it is if it works) but getting rich quick usually means hard work and sacrifice and that’s not a risk many people are willing to take unless they know what they’re getting into. You need to have a great product that people will want to buy and you need to put in the hard work needed to make it happen.
6. CrowdFunding is not a good way of raising funds for a non-profit.
As much as it is a good idea, there are downsides if you’re looking for funding for a charity or non-profit organization. Asking people to pledge money online can be very demanding and may not be the best option if you’re looking for donations which will go towards projects that can’t just be bought online through a website.