Many small business owners dream about tapping the power of the internet to raise funding for their growth. Yet in reality few people have an understanding of what it takes to be successful in the realm of crowdfunding. Many of my talks and article focus on explaining that many of the same attributes that indicate success in other aspects of business apply equally to crowdfunding. Many of these tips come from an article by Oliver Smith about successful big business crowd funder Alex Zivoder. Yet the concepts are equally valuable to the smallest business contemplating its first crowdfunding campaign.
Here is a short checklist of the most important ingredients for successful small business crowdfunding:
- Be prepared. Review and tighten any loose ends in your business plan, tax return, financial statements and government filings to ensure that all meet or exceed legal requirements and marketplace standards. Have well thought out responses to all questions that might be raised by investors (think “Shark Tank”). It is critical that you communicate that your business is ready for this next big step in its growth cycle.
- Tie in the business marketing communications. This is really the key to success. Professionally prepared video content, consistent branding and messaging are presumed to be the minimal requirements for successful crowdfunding. By the time you bring your offering to the public it must be clear to all stakeholders why you want to raise funds and why your are choosing to raise these funds from the crowd.
- Use a three-pronged approach. First get your existing investors to commit to the campaign. Then get your current customers involved. Only then, as the third step, open the idea to new outside investors.
- Don’t count on it. Just like bank funding and traditional stock market offerings; crowdfunding is most successful for those businesses that do not require it for their survival. Have a plan B and communicate that alternate cash flow option in your marketing and stakeholder communications. It is important that crowdfunding not appear to be your last chance to stay in business. Be sure that any effort or expense that you incur for the crowdfunding effort is just as valuable for other aspects of your business growth.
The first most valuable resource is a small business accountant with the experience to handle the items in #1 above and then later pull in and integrate with all of the other aspects of a successful crowdfunding campaign.