Raising capital for a startup. Crowdfunding to kickstart a new product line. Asking family for a loan. There are many types of fundraising for business purposes.

Regardless of the method, launching a fruitful fundraising campaign takes some work. Avoid the most common fundraising mistakes by following our tips for success below.

Plan, Plan, and Plan Some More

You know what they say: “Failing to plan is planning to fail.”

When it comes to fundraising for business, perhaps the most common and overarching mistake is a lack of planning. Not only must the fundraiser itself be well thought out, but there needs to be a deliberate plan for everything that goes into making it a win.

• Timeline – Determine your deadline and work backward from there. Don’t rush it. In fact, according to Martin Zwilling, the best time to start considering how to fundraise for a business is now. Regardless of when you will be executing your fundraiser, start planning as early as possible.

• Research – Get to know your target audience. What are their expectations and restrictions? How do their priorities align with yours? A little research can go a long way, regardless of whether you’re launching a Kickstarter campaign or scheduling face-to-face meetings with investors.

• Goal – How much do you need, really? Of course, you probably know how much you need to get your business or product off the ground. But that’s not the only thing that will cost money. Fundraising for business can include a few other expenses that might not be top of mind. Do you need to hire a PR person, pay a web developer, cover rent, etc.? Make sure you include all of those potential costs in your fundraising goal, too.

If we could give one word of fundraising advice, it would be DO. NOT. RUSH. Well, that’s three words, but you get the point! Bottom line: A well-executed fundraiser tomorrow will yield significantly better results than a rush job, today.

Think Outside of the Box

Repetition is boring! Implementing the same old fundraising ideas for small businesses is safe and comfortable. But that doesn’t mean they are the most effective (or efficient) way to raise funds.

The status quo won’t capture the attention of your backers, nor will it energize your team. Over time, a lack of creativity can result in flat or declining contributions, as well as missed opportunities. Who wants that??

Don’t underestimate the value of creativity as you consider how to fundraise for a small business. (Or a large business, for that matter!) Before deciding on a plan, really take the time to brainstorm some out-of-the-box ideas. The easiest way to formulate an innovative concept is to learn as much as you can about your niche and those in it. Once you really understand your consumers and investors, you’ll be surprised by the solutions you can come up with.

Remove Potential Barriers

It’s been said that customers make buying decisions in less than a minute. The same can go for investors. This means that they are making judgements about you, your business, or your product with nothing more than a single interaction. Even the best business fundraising ideas can flop if investors believe that you’re worth their money!

Focus on web design. Don’t let your website hold you back. You can have one of the best business fundraising ideas, but If your site is difficult to navigate, isn’t mobile friendly, includes distracting elements, contains poorly written copy, etc., potential investors are likely to take one look…and bounce.

Make contributing easy. A beautiful home page, a perfect fundraising plan, the ideal product. None of them matter if your method of processing payments isn’t functional. Honestly, how much effort would you spend trying to back a business if the process were a pain in the butt? Probably not much. You’d likely find another investment that provides the same value with less hassle.

In short, take the time to ensure that your investors and customers have a pleasant experience. Yes, this may mean extra time developing your site or extra money spent on payment processing software. Trust us! It will be well worth it in the end.

Put It Out There 

Marketing works! Get the word out about the opportunity your business provides potential investors.

Utilize Press Releases. This often-overlooked step is simple and relatively quick. Write up and share a quick press release to let the world know what you have to offer!

Network. Networking isn’t about finding investors in the moment. It’s about what happens afterward, and it’s one of the best ways to gain word-of-mouth exposure. Why? Because even if your opportunity isn’t right for Joe, it could be perfect for his sister Debbie, his buddy Patrick, or his neighbor Leon. Always share information about your company, what you’re trying to do, and how fundraising will help. You just never know who Joe knows.

Don’t Stop. Once you feel like you’re “there,” don’t back off. Keep talking, keep sharing, keep marketing. Extra publicity is beneficial, both today and down the road.

Put Relationships First

While a kick-butt pitch and awesome product are necessary pieces to the fundraising puzzle, trust and rapport are critical components as well. Always cultivate and nurture relationships with your investors, regardless of how much they contribute.

Build relationships first. Take time to build relationships before asking for money. This gives your potential donors time to get to know you. It also gives them time to reflect and ask questions. This investment in relationship-building will naturally create value in the eyes of those you plan on asking for cash.

Say thank you. There are a number of inexpensive, creative ways to thank your supporters. Whichever method(s) you choose, say “thank you” early and often. Never let a kind word, a social media share, or a financial contribution get past you without expressing gratitude.

Check-in. Relationships are a two-way street. A happy birthday note or congratulations email will set you apart. Want to take it up a notch? Send a bottle of wine as a housewarming gift. Deliver a box of candy at the holidays. There are thousands of ways you can stay top of mind and give back to investors.

Utilize social media. Social media allows you to easily build authentic connections with your supporters. You’ll make them fall in love with you, your story, and your business, all by sharing frequently on social platforms.

Keep everyone current. Don’t undervalue the power of information. Let your investors know what’s happening. Show them how their investment is helping. By sharing your process, you will keep your stakeholders excited about what you’re doing!

Fundraising for Business Success with Hungry Media

The “ask” is just one ingredient in the recipe for fundraising success. Don’t forget to do the small things well, and consistently.

Plan ahead. Be gracious and genuine. Make investors’ impact understandable. Interact. Put your whole heart into your fundraising efforts for amazing results. Hungry Media can help with all of this!

We’re a leading digital marketing company with experience in a wide range of industries. If you’re getting fundraising campaign off the ground, want to kick around fundraising ideas for new business, or just want to avoid the most common fundraising mistakes, reach out! We’d love to help you plan for success. info@hungrymedia.com

contributed by Melissa Lucas, senior staff writer

If you’ve spent time on social media in the past decade, you’ve seen (or scrolled past) at least one crowdfunding campaign. But, how does it work? Why is it such a big thing? And more importantly, how can you pull off a kick-butt crowdfunding investment campaign yourself?

What is Crowdfunding?

Crowdfunding is exactly what it sounds like. A crowd helps fund your project. That’s it. Well, okay. That’s not ALL of it, but that’s the general gist.

The premise of crowdfunding is no different than that of traditional investment: capital is provided in exchange for an expected benefit down the road. What sets crowdfunding investment apart is the way in which this is accomplished.

Why is Crowdfunding Investment so Great?

Crowdfunding uses digital media to bring entrepreneurs and investors together, helping businesses gain traction and exposure. Because it’s based in cyberspace, a crowdfunding campaign has the potential to reach an enormous number of investors.  

Traditionally, an entrepreneur seeks out investors and pitches them individually, giving the same spiel dozens, or even hundreds of times. Crowdfunding sites turn the funnel upside down. The same pitch is received by dozens, or even hundreds of potential investors. But it’s all contained in a central location, and the investors are the ones doing the seeking. In short, it’s a streamlined approach for both the entrepreneur and investor. What’s not to love?

Types

Crowdfunding websites can be divided into three categories. The site you choose will depend on your ultimate goal and the type of product or business you are trying to launch.

Donation Crowdfunding

The most familiar form of crowdfunding is probably donation-based. We’ve all seen a GoFundMe page, right? Causes are varied and can range from crowdfunding for non-profits (i.e. disaster relief funds) to crowdfunding for personal purposes (i.e. helping a friend cover unexpected medical bills). Regardless of scale, this type of crowdfunding is born from the goodness of our hearts. There is no expectation of a return.

Equity Crowdfunding

Equity-based and real estate crowdfunding are relatively new. They allow accredited investors to become part-owners of a company or property by trading money for equity. This type of crowdfunding investment is most similar to traditional investing, as there is an expected financial return on the capital contributed.

Rewards Crowdfunding

Rewards-based crowdfunding turns consumers into investors. This is the most common type of crowdfunding for start-ups. Consumers provide a financial contribution towards a start-up or the creation of a new product. In exchange the company provides those consumers with a reward, usually in the form of the new product or service. This is the premise on which most Indiegogo and Kickstarter crowdfunding campaigns are based.

How to Optimize Your Campaign for Success

Whether you’re crowdfunding for business or personal purposes, here are a few tips to help you create the best crowdfunding campaign possible:

1. Leverage your network, both in person and online.

Now’s the time to use your connections, whether they are digital or IRL. Share your campaign with everyone you know, including your current customer base if you have one. Post on your social pages, talk it up to your family, tell your neighbors! The more people who know it, the better.

2. Tell a story.

Everyone loves a compelling story. Let potential investors get to know YOU. Share your background, introduce your team, dive into the history of your business. Investors will be more likely to back you after you’ve built a bit of a connection.

3. Focus on traction over funding.

Funds follow traction. Some of the best crowdfunding sites show the current number of backers for each campaign. This is awesome because investors are more likely to fork over a few bucks if they see that others have done the same. Aim to gain investors (i.e. traction) immediately. This may mean setting a low pledge amount initially. That’s okay. Eventually the number of backers can be used as an additional selling point, thus helping you raise more funds in the end.

4. Communicate often.

Talk to your investors. Tell them how you plan to use the funds you raise. Send updates. Share behind the scenes details. Like we said, people love a good story. So, there will be interest in following along as you work through your process.

5. Create a social media plan.

Of course you’ll share you campaign on social media, but don’t just throw it up on your pages, willy nilly. Social media platforms can vary in terms of demographics, user expectations, successful post types, post length, hashtag use, etc. Take the time to customize your promotion for each platform.

6. Tailor the pitch to your target market.

Gone are the days of generic marketing, so really think about who will benefit the most from your product or service. Now sell to them! Tailor everything – your pitch, your website, your social media posts – to the person who will be using your product.

7. Don’t reinvent the wheel.

Trial and error is definitely part of a crowdfunding investment campaign, but you don’t have to start from scratch. Take advantage of those who came before you. Research successful crowdfunding campaigns, both within and outside of your niche. Take notes on what worked and apply this new knowledge to your campaign.

8. Use video.

We repeat. Use video! Not only does video cater to our short attention spans, but it’s a fantastic way to achieve numbers 1-7 above. A well thought out video is more likely to move a campaign forward than a page full of text and day.

Which Platform is Right for You?

While there are several crowdfunding sites available to entrepreneurs, the most widely known are Kickstarter and Indiegogo.

Kickstarter is the largest, with over $4 billion invested in more than 160,000 projects. This platform tends to specialize in creative projects and offers some pretty robust reward-level options.

Indiegogo is geared towards technology and hardware product launches. The big benefit to Indiegogo is its flexibility. The company will release funds on a prorated basis, as opposed to Kickstarter which requires that the fundraising goal is met before any money is released.

Other crowdfunding website options include Fundly, Just Giving, Facebook, and GoFundMe. Check out this comparison tool to learn more about the pros and cons of each one.

Want to Learn More?

Hungry Media is here to help! Whether you’re crowdfunding to jumpstart your new business or you are simply looking to raise capital for your most recent product, we’ve got you covered. We want to hear about your great idea! You can reach us at info@hungrymedia.com. Get in touch, and let’s start making plans!

contributed by Melissa Lucas, senior staff writer

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