The well respected law firm Blank Rome LLP, headquartered right here in my hometown of Philadelphia, put out a blog post this week titled “Is Crowdfunding a Mirage or an Oasis?”. With all respect, this is the wrong question for a business adviser to ask at this stage of evolution. The structure of business crowdfunding is still evolving, month by month, even day to day. The details of the JOBS Act passed in 2012 (the focus of this article) are arguably the least important factors in the ultimate success or failure of a crowdfunding project to most small businesses on Main Street today.
Perhaps a more important and useful focus of a professional business adviser’s discussion would be to point out that the same ingredients that go into a successful small business development will lead to a successful crowdfunding campaign, and vice versa. In other words, the key determinant of success here isn’t found in the crowdfunding arena itself, but rather the internal business preparation that led up to the offering.
I would suggest instead the opposite starting position: it really doesn’t matter whether crowdfunding is an oasis or a mirage. Well-managed businesses with a clear focus, solid strategy and good preparation will always find funding. Those without these ingredients don’t deserve it; whether through crowdfunding or any other source.
My message to business owners: focus on the basics. Have your firm’s legal framework and accounting systems in top shape. Engage in ongoing strategic planning. Develop deeper marketing channels. Learn more about all of the options in the rapidly changing field of small business financing. All of this will lead to your firm’s success with or without crowdfunding.