Whether it’s to put food on the table, get all your bills paid, or create the job of your dreams, funding a business project is expensive. And for many startups and new business ventures, it’s tough to raise the capital needed.
Since the economy collapsed, getting a business or personal loan the traditional way is much more difficult. But thankfully, there’s a great new way to fund your business, that’s both fun and inexpensive.
[highlight]It’s the perfect way to get free marketing and hype around your business with little effort.[/highlight]
It’s a fun social lending network called crowdfunding. And since not everyone has the resources, connections or know-how to raise money, crowdfunding (and the companies who offer it) is helping all kinds of people, fund their dreams.
What is crowdfunding?
Crowdfunding is when a group of people join together and donate money to fund a project for an individual or organization. If you’re a struggling artist, a local coffee shop or a clothing designer wanting to {r}evolutionize the world, you can use crowdfunding to spread the word and raise money for your startup.
People all over the country are putting their dreams on the line, offering rewards or bonuses in exchange for money. Some projects are about funding a new career path, building gadgets and technology or helping everyone understand that a fight with cancer should not be fought alone. Thousands of individuals are lining up to get behind these projects.
Projects can be created by children, teenagers and anyone who needs to raise money for their dream; there are no limits. Many authors like to use crowdfunding to raise capital to self-publish their books and ideas. Some of the projects even go viral, and end up raising millions of dollars, completing shattering their $100,000 goal. Crowdfunding is a powerful business and marketing tool!
[highlight]Kickstarter[/highlight]
The leader in social lending networks is Kickstarter, which has helped people pledge millions of dollars to projects for music, art, film, food, technology and everything in between. You begin by creating a profile, along with a video detailing what your product or project is about. You select the goal you want to raise and the number of days to do it; 30 days (or less) up to 60 days max.
The only catch is, if you don’t raise the funds within the chosen slot of time, you won’t get to keep the money. However, if the project is successfully funded, all the credit cards and accounts of the “backers” will be charged the amount they pledged. Then Kickstarter will deduct a 5% fee and you’ll receive the funds.
About 46% of the projects on Kickstarter get fully funded, and your chances go up even higher if you already have a large platform to reach your audience (like a solid Facebook, Twitter or blog following). Here’s a secret: Backers respond to projects with a lot of passion, sincerity and how useful the project will be. They also want to see creative rewards that are fairly priced and that you communicate your product clearly through the video.
[highlight]Indiegogo[/highlight]
Indiegogo is very similar to Kickstarter and offers the same great social lending platform that Kickstarter does. The main difference between the two, is that Kickstarter requires participants to have a U.S. bank account and major U.S. credit card, while Indiegogo is available worldwide. Kickstarter is a lot more restrictive with the projects it backs, and Indiegogo will help raise money for just about anything; like environmental issues, health related topics and political projects.
Two funding options:
1. [highlight]Flexible funding:[/highlight] You only pay a 4% fee to Indiegogo if you reach your targeted amount, or 9% if you don’t succeed.
2. [highlight]Fixed funding:[/highlight] You still have to pay the 4% fee if your goal is reached, but if it’s not, you receive nothing and the pledges are refunded.
You begin by creating a profile, listing your idea, the goal amount and time period then describe your project using video or text. To help spread the word, you get access to social media integration, direct email and announcement features.
How to succeed with your crowdfunding project
Enlist help from influential contacts. Ask your friends, family and other influential contacts to help jump start your project. Enlist their help in spreading the word on social media platforms, blogs and other PR outlets
Update your progress. Be sure to update your progress and involve your audience the entire way. Celebrate and share small milestones, like “We just passed the $1,000 mark thanks to everyone’s amazing support”.
Offer meaningful and creative rewards. Creative rewards will entice people to pledge more money. Consider offering perks that are unique, fun or exclusive to this project.
You are just a few clicks away from funding your startup company, your latest idea or that project you’ve put on the back burner. If you don’t want to use Kickstart or Indiegogo, consider these other 10 crowdfunding sites for entrepreneurs. So take the plunge and start funding your passion, it won’t cost you anything!
Author bio: Carrie Smith is the writer behind the Careful Cents personal finance and lifestyle blog. She is passionate about all things money, career, debt and travel. Her work been featured on The Huffington Post and Brazen Careerist.
Carrie Smith is a personal finance expert and blogger who believes there’s no such thing as small ¢hange. She is passionate about all things money, career, debt and travel. She regularly writes on her own blog Careful Cents. You can connect with her on Twitter @applecsmith.
