The challenges faced by crowdfunding campaigns in the country
Once upon a time, if you had a killer business idea, the only way it was going to come to life was if you were lucky enough to find a bank to back you, and this often involved having deep pockets of your own. Those who didn’t have collateral and a financial institution to support them usually had to wave goodbye to their dreams.
Thankfully, that mold has been broken. Now, entrepreneurs and brilliant enterprising minds have more resources for getting their ideas to take flight. Crowdfunding has opened doors to amazing opportunities for many individuals and small businesses.
That said, crowdfunding isn’t always a straightforward process. There are challenges that everyone faces along the way. Yes, there’s finding the perfect pitch that appeals to the right investors, but it’s more than that. There are several lesser-known challenges that those who embrace crowdfunding are almost sure to come up against.
Knowledge is power, so here are five challenges that you should expect to encounter in your journey. The more prepared for them you are, the more successful you’ll be.
1. Establishing Trust
Many people consider crowdfunding because they’re trying to break into the business. They have innovative ideas or talent that they want to promote and share. The only problem is that with lack of experience comes lack of exposure, and this means that potential investors don’t have much to build trust on.
Think about it. You’re asking these people and companies to invest in someone they know very little about. It’s bound to feel a little risky to them. While you can’t magically create a past, you can build a future by taking steps to build your trustworthiness right now.
It’s as simple as transparency. Start by taking to social media and building a professional image for yourself. Be honest and transparent, and build a following. Get people excited about your ideas so that investors have more reason to back you.
2. Choosing The Right Platform
Not all crowdfunding platforms are created equal. On the surface, it might seem like they all offer the same basic service, but there’s more to choosing the right platform than immediately meets the eye.
For starters, reputation is key. When choosing a crowdfunding platform, look at the results, and do a little research before signing up. To avoid wasting time on the wrong platform, look at what types of businesses and ideas have had the most success. Are they aligned with what you’re attempting to achieve, or are they off in another world altogether?
Finally, look at some hard-core numbers to avoid challenges further down the road.
• How many active campaigns do they have running?
• How many visitors do they get?
• How much is it going to cost you to run a campaign on this platform, and is the cost worth it?
• Have you pored over their terms and conditions with a fine-tooth comb?
3. Getting Potential Contributors Excited About Your Dreams Beforehand
A common crowdfunding mistake is making the creation of a campaign the No. 1 priority. The truth is that to be successful, the implementation of crowdfunding should be much further down the list.
The reason for this is that starting with a blank slate makes the challenge even more difficult for you. It means you’re going to be taking a ton of backward steps and wasting time.
The first thing to do, besides creating a solid business plan, is to generate excitement about your idea. Coming to a platform with a plan in place, a great word-of-mouth reputation and a following that’s already amped up about your ideas is going to get investors excited about your potential.
In the months before you start your campaign, make sure that you have an online presence, and start building your reputation through actions in your industry, or even your community. Take as many steps as you can on your own in the beginning stages, and if possible, get yourself in the line of sight of potential investors.
4. Protecting Yourself From Idea Thieves
Once you put your idea out there, it’s within view of everyone. Unfortunately, some of those people won’t have the purest intentions, and they’ll try to use your hard work to their own financial advantage. Unless you have a completely unique, never-been-done-before idea, it can be difficult to claim sole ownership.
Luckily, there are a few things that can be done to protect yourself preemptively.
First, determine if any part of your idea can be protected by copyright laws, and file for one immediately. Additionally, be wary of how much information you’re sharing publicly and what you’re sharing in private. Have anyone who will have access to sensitive ideas sign a nondisclosure agreement, and enlist the advice of a lawyer if necessary.
5. Calculating Investor Reward And Planning For Fulfillment
The people who invest in your project or idea are going to want something in return. One of the biggest challenges is figuring out what that return should be and then making sure that you’re able to follow through on the agreement. Some might want a small token and regular updates, while others are going to want a slice of your pie.
Generally speaking, the sweeter the incentive, the bigger the investment. Still, be careful to not overcommit yourself. First, decide what’s reasonably doable.
Follow-through is huge. Make sure you’re planning to follow through on your promises each step of the way. Remember, being honest and realistic with investors now means they’re more likely to have your back in the future.
Crowdfunding is a great and effective way to reach your professional goals. Being prepared for challenges will only make you more successful. When you’re prepared, nothing can hold you back.
Conclusion
Knowing these challenges and how to navigate them can help you a great deal and prepare you better to raise funds via crowdfunding.
Join The Crowdfunding Community
If you’re ready to jumpstart your campaign with expert crowdfunding consultants on board, contact us today! We’ll help you navigate each stage so that raising money becomes more accessible than ever before.
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