Crowdfunding Terms You Should Know in a Recession

Check Out These Crowdfunding Terms You Should Know in a Recession

Crowdfunding can seem to be a bit of a mystery. Why are people willing to part with their cash in this particular manner? There are a lot of crowdfunding terms you should know in a recession. They are thrown around all the time and they can sometimes get confusing. So consider this your primer on some basic crowdfunding terminology.

Because even if you do not think you will use this method of fundraising, you will probably encounter it all the same.

But before going any further, does crowdfunding ever actually, you know, work?

Crowdfunding Success, in a Nutshell

For some companies which crowdfund, the rewards are great. According to Crowdfunding Blog, the single most successful crowdfunding campaign was for the Pebble Time Smartwatch. And that was as of November of 2018. But before you run out and buy one, note that they are now a part of FitBit.

As in, they went out of business in July of 2018. And this is a business which raised over $20 million in 2015. That is no typo. And in point of fact, Pebble holds three of the top six spots in the biggest crowdfunding successes of all time. Together, these three crowdfunding campaigns took in a staggering $43.39 million. This is about $8 million more than the town of Huntington, New York (population 203,264) budgeted for highways in 2018.

Hence there is one thing that should be clear to all. Runaway crowdfunding success is no guarantee whatsoever of actual success.

But now it is time to get to the crowdfunding terms themselves.

Crowdfunding Terms You Should Know in a Recession: Project

A project is what you are asking for money for. Projects can take a few months or even years. The more complex your project, then (usually) the longer it will take. The person starting the project is generally called the project runner or the project creator.

Projects can be for goods or for services.

Crowdfunding Terms You Should Know in a Recession: Donors

The people who donate to the project are called donors. Or sometimes they are referred to as contributors or backers.

On rare occasions, they may even be called investors. However, such a word connotes a far different relationship. Many crowdfunding platforms shy away from such a term. And this is for good reason. It is because investors and investments may come under the purview of the SEC. The Securities and Exchange Commission exists in order to protect investors. This is in ways not current available to donors 0r other contributors to the success of businesses.

Hence, unless the crowdfunding platform is specifically for investing in companies, more like angel investing, you are not too terribly likely to see the investor.

Crowdfunding Terms You Should Know in a Recession: Campaign

The act of requesting money on a crowdfunding platform is called a campaign. This is the soup to nuts of crowdfunding. So it covers everything from the first pitch to the final collection or perk distribution.

Crowdfunding Terms You Should Know in a Recession: Donor Levels

In general, donor levels refer to the amount of rewards which are on offer for a particular size donation. Note: I will get to rewards in a moment. Your donor levels might look something like this:

$10 fountain pen (100 available)
$20 includes $10 level plus a tee shirt (50 available)
$50 includes $20 level plus a framed picture (30 available)
$100 includes $50 level plus dinner with the project runner (10 available)
$500 includes all other perk levels plus a new car (2 available)

Donor levels are limited by your imagination and your capacity for handling complexity. After all, five separate donor levels mean you are keeping five separate lists. If you are well-organized, then this is possible. But it is not easy. Five separate donor levels are plenty, particularly for people running their first campaigns.

Truthfully, you will be a far happier person if you cut the number of donor levels to no more than three.

Of course, time and budget should be considerations for anyone. But that is not just the case for crowdfunding.

What frustrates you the most about funding your business in a recession? Tell us in the comments.

Crowdfunding Terms You Should Know in a Recession: Rewards (Also Known as Perks)

One basic about crowdfunding for creative projects is that you will need to provide incentives for your donors to open up their wallet. Crowdfunding to help someone with their medical expenses is a different animal. So let us get back to crowdfunding for business funds.

This is where perks come in.

Your rewards can be nearly anything. But it can quite literally pay to have them relate directly to your project.

For example, if you are crowdfunding to get enough money to back your new smart phone invention, then your rewards probably should not be your grandmother’s blueberry muffin recipe. And this is no matter how wonderful it may be. Instead, you could base your rewards around your invention. So this could be everything from offering a case to an extra battery or charger. Or you might even offer an app which only your donors can download.

A Word to the Wise about Rewards

Rewards are a very real part of crowdfunding and they can often be a part which project creators do not take into consideration. Sometimes, we think a product will go to market in, say, a year. But circumstances change, and now one year turns into two. So be it – this sort of thing happens all the time.

But it is an issue if your perks are dependent on your product going out the door. So if you need to fulfill perk promises to 10,000 people, you will likely find you need to do one of any of these things:

Delay your product launch
Hire someone to do fulfillment for you
Offer alternative perks (if you can)

Reneging is not an option, and it can get you on the wrong end of a lawsuit if you are not careful.

A fourth option is delaying perk fulfillment. Not every donor will go for that.

A For-Instance on Perk Level Complexity

Sending out so many perks is a major task. It can take months to get everything out the door.

Why does it take so long? Consider the degree of complexity. Let’s go with an easy number: 100. So let’s say you have 10 separate perk levels and they each have 10 slots. Once an eleventh person wants a certain perk level, they just plain can’t have it, as it’s gone. Are you with me so far?

Your ten separate perk styles may be of differing weights. So this means they will have different shipping costs. If any of your 100 donors are outside of the United States, then you will have to pay more to ship to them as well. Plus of course you have to make sure all of the addresses are complete and correct.

It becomes even more complex when your perks do not fit into such neat little buckets. This is where you have, say, eight perks. And you might have anywhere from 12 to 1,000 people who are supposed to be getting them. Plus some people may have donated twice and are waiting for two separate perks. Or maybe even more.

See how ugly and difficult this can get – fast?

What frustrates you the most about funding your business in a recession? Tell us in the comments.

Getting Around This Problem

The easiest way to get around these issues is to offer intangible perks. In our smart phone example, the exclusive app would fit the bill nicely. Your best bet is to make the intangible perk good for the largest number of donors possible.

Hence if your lowest level is $10, and you have 100 of those slots, then you could just give 100 people a download code. This is a lot faster than figuring out postage for all of those donors. Plus, with an intangible perk, technically the number of perks is effectively infinite. But scarcity gets people interested, so you might not want to make the downloads never-ending.

For the more tangible perks, leave them for far smaller groups, such as the 25 people who are at your two top donor levels. Mailing to 25 people is far easier than it is to mail to 10,000 people. And this is so even if the mailings are difficult.

But I Don’t Have Intangible Perks!

No? Then what do you call a coupon sent in email? See, there are ways to offer intangible perks even when the entire business operation is very, very tangible. Coupons have been around, seemingly, forever. People will gladly print them off or carry them in their smartphones for scanning.

Or there can be discount codes, which are virtually the same thing, except with no designing of a coupon to be cut out or scanned. Amazon, for example, gives these out all the time. And the vast majority of backers will know exactly how to use them.

Crowdfunding Terms You Should Know in a Recession: Rewards-Based Crowdfunding

Probably the best-known of all crowdfunding platforms is Kickstarter. Kickstarter is, by its own rules, just for project creation. That is, it is not for charitable donations. This puts it squarely in the camp of rewards-based crowdfunding. That is, the project exists for the purpose of getting a new market to product or the setting up of a new business.

This form of crowdfunding offers rewards (perks), which are either physical or intangible. It can also serve as a means of pre-selling a product before even a prototype has been made. However, until there is an actual available product, is it a sale, or not? While it is easy to try to dismiss such a concern as no big deal, well, not so fast.

Whether perk fulfillment is a sale or not just might matter.

Sales and the Law

In the United States, the sales of almost 100% of all goods are covered by the Uniform Commercial Code. This set of laws is identical virtually everywhere in the country except in the state of Louisiana. And even there, it is still rather close.

The UCC covers any number of concerns with products. These include merchantability, which asks if a product can reasonably be sold. And it also includes fitness for a particular purpose. But it does not cover liability in case a product injures a person. Still, that can be another question, in case something like that happens.

Product Injuries

When a product injures someone (in the law, this is called product liability), it does not matter if the injured party directly bought the product or borrowed it from another or the like. However, at a certain point, it becomes such a tenuous and far-reaching relationship between product creator (that is, the manufacturer) and the final end user that questions as to cause and effect can arise.

While new products sold via crowdfunding are, without a doubt, sales, what about perks?

Are perks sales, or not? They do not seem to be gifts. After all, when was the last time you paid anything for a gift? Is it not the very definition of a gift that there is no cost?

Consideration

In general, in contract law, a sale is an exchange of goods (or services) for a price or fee. This price or fee is referred to as a consideration. A consideration is either a fee or its equivalent, such as through barter. The consideration does not have to be equal in value to the sale price of the goods. That is, the transaction does not stop being a sale just because the buyer got a really good deal, or a really bad one.

Yes, selling your house for $1 is, technically, a sale.

If a perk is worth $1 but is only available at the $10 donation level, what then? But if it is a sale, then the UCC should apply, yes? If the perk injures someone, then the question does not really start to matter until the end user is extremely far-removed from the project creator.

These questions do not seem to have been litigated yet. It will be interesting to see what happens when, inevitably, they are.

Crowdfunding Terms You Should Know in a Recession: Equity-Based Crowdfunding

When businesses look to hand over percentages of ownership in exchange for current financial backing that is called equity-based crowdfunding. Kickstarter, for example, does not allow this. But there are platforms such as AngelList and Crowdfunder which do.

After the passage of the 2012 JOBS Act, smaller companies have more freedom to crowdfund and hand over equity shares. And this is without quite so many Securities and Exchange Commission (SEC) filings as were needed before. This federal law opened up crowdfunding more. And it made it a far more attractive option for startups in particular. The SEC, naturally, has an interest in this particular species of crowdfunding.

Crowdfunding Terms You Should Know in a Recession: Debt-Based Crowdfunding

This form of crowdfunding is also called peer to peer lending. Other names for it are P2P, crowdlending, and marketplace lending. Borrowers will set up campaigns in order to fulfill their financial needs. And then lenders will contribute toward the goal for an interest.

This particular method of online funding may come with other consequences. It could very well become a true “threat to the traditional banking system in the areas of consumer and business loans, as has already been demonstrated by the rapid success of [these] online lending marketplaces.” (Hollas, Corporate Finance Review, Volume 18).

As the United States economy changes over time, peer to peer lending may very well be the only way for some businesses to get funding. But look for regulators to start to step in, particularly if there are instances of fraud or more serious criminal activity.

Crowdfunding Terms You Should Know in a Recession: Litigation Crowdfunding

And speaking of criminal activity, there is also litigation crowdfunding. With litigation crowdfunding, a plaintiff will ask for a monetary donation for the purposes of funding a court case. If the plaintiff prevails, then investors may get more than their initial investment.

Unlike some of the other forms of crowdfunding, there are ethical considerations when it comes to litigation crowdfunding. Ethics problems include the possibility of unlawful interference in an attorney-client contract.

Lawyers and Ethics and Crowdfunding and Money

Another possible issue involves providing information to backers. In other forms of crowdfunding, backers understandably want advance information on a campaign. understandably, they want to know precisely what they are financially getting themselves into. But in the case of the law, such transparency can very well mean violating attorney-client privilege. If privileged communications are necessary to get donors to fork over cash, then this is an ethical violation for the lawyer.

Plus, what happens if the backers push for a greater return on their investments? Could a group of backers – or a crowdfunding platform – push for a settlement for sure money? Or could they push for a trial in the hopes of a big payoff? Either scenario is possible.

And there is even another possibility. What if the crowdfunding platform or backer group pushes to direct the course of discovery, or even motion practice?

And what happens if, somehow, it gets out at trial that a case is crowdfunded? What will a jury think? Will they see the plaintiff as greedy? Or will they see the case as more likely to win? Otherwise, the reasoning could go, why would people put their money on the line for it?

These questions go beyond dilemmas and interesting philosophical exercises. They could, if things go too far, end up being a part of disciplinary proceedings against a lawyer in an ethics investigation.

Crowdfunding Terms You Should Know in a Recession: Donation-Based Crowdfunding

In this form of crowdfunding, a charity solicits donations via a crowdfunding platform. There are either no perks or they are tiny. The best-known of these is probably GoFundMe. This is where project runners can either raise funds for themselves or for charities.

Donation-based crowdfunding also encompasses the far too common crowdfunding pleas we all see cropping up these days. These crowdfunding pleas are for everything from help paying medical or veterinary bills to attempts to get donors to fund dream vacations and honeymoons. Or they can even be to just fix the project runner’s car.

Without perks or presales, there are no UCC considerations. But there can be questions from state governments if a charity raises funds via crowdfunding and then someone just pockets the money. After all, the government wants to know if charities are on the up and up.

What frustrates you the most about funding your business in a recession? Tell us in the comments.

Crowdfunding Terms You Should Know in a Recession: Bootstrapping

In the absence of crowdfunding, startup founders often used bootstrapping to get their projects off the ground.

Bootstrapping is just the use of personal finances to fund a new company. The biggest advantage to bootstrapping is that a business owner does not have to give up any ownership in the company.

The biggest disadvantage, of course, is the loss of a life’s savings is a very real possibility. Crowdfunding in particular is meant as a means of minimizing bootstrapping. But it probably will never eliminate it entirely.

Crowdfunding Terms You Should Know in a Recession: Takeaways

Crowdfunding is an interesting method of raising money for a business. But it has its own rules and methods. There are potential pitfalls along the way. Crowdfunding can, at times, feel like the wild, wild west.

But at least with these crowdfunding terms you should know in a recession, you can be more prepared to handle anything crowdfunding throws at you. And as always, if you have any questions, please feel free to ask them in the comments section of this blog post.

The post Crowdfunding Terms You Should Know in a Recession appeared first on Credit Suite.

Top Recession Crowdfunding Campaigns: How to Push Your Recession Crowdfunding to the Top

The COVID-19 pandemic and the likely resulting recession has most small business owners scrambling for ways to fund their business. First, be sure you take advantage of all that is offered by the Federal government and your state government, including the Paycheck Protection Plan, or PPP.

How to Run a Successful Crowdfunding Campaign in a Recession

Crowdfunding in a recession may or may not work. It will be harder to run a successful campaign for sure. In the best of times, crowdfunding can be hit or miss, so it doesn’t take a lot of imagination to realize it can be worse during a recession. We can show you how to help yours become one of the top recession crowdfunding campaigns so you can stay afloat during hard economic times.

To become one of the top recession crowdfunding campaigns, you first need to understand what makes any crowdfunding campaign successful. That’s what we are attempting to help you to do here. We have found taken a look at some of history’s most successful campaign, and dissected them to figure out what the secret was to their success.

Of course, in a recession people generally have less disposable income. You can still run top recession crowdfunding campaigns, but it may be harder. The formula holds however. The characteristics of a top campaign remain the same, recession or not.

In both, a healthy dose of luck is needed. That’s the element that is outside of anyone’s control. So focus on what you can control. The first step is understanding exactly what crowdfunding is.

Top Recession Crowdfunding Campaigns: What is Crowdfunding?

It’s actually pretty cool. Crowdfunding sites allow you to pitch your business to thousands of micro investors. Anyone who wants a piece of the action can buy a piece of the proverbial pie.

Investors pledge amounts on a broad spectrum depending on the campaign and the platform in use. They may give $5, $80, $150, or even over $500. Generally speaking, investors can pitch in however much they like.

Though not always necessary, most entrepreneurs offer rewards to investors for their generosity. Typically, this comes in the form of the product the business will be selling. Different levels of giving result in different rewards. For example, a $50 gift may get you product A, while a $100 gift will get you an upgraded version of product A.

Hit the jackpot and weather any recession with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Where Do You Start to Launch Top Recession Crowdfunding Campaigns?

There are many crowdfunding sites, but the most popular are Kickstarter and Indiegogo. While the platforms are similar, there are some very large differences. The most obvious is the timing in which you receive the funds from investors.

With Kickstarter, you have to reach your preset goal before you can receive the funds. If you set a goal to raise $12,000, investments have to reach that amount before you get your hands on any of the money.

Indiegogo, on the other hand, lets you choose if you want to receive funds as they come in or wait until you reach your goal. In addition, they have the option for InDemand, which lets you continue to raise funds after your initial campaign is over, without technically starting a new campaign.

Indiegogo also has a flexible funding option for those who may need it.

Each have warranted amazing results for many entrepreneurs. To make the choice for yourself, you need to evaluate who your audience is, and which platform will best reach them.

How Successful Can A Crowdfunding Campaign Really Be?

It can be quite successful actually. While it certainly isn’t the norm, these top campaigns far exceeded their fundraising goals.

Pebble Smart Watch

Pebble actually has several of the top 10 campaigns ever on Kickstarter. Their 2nd campaign is the highest funded campaign to date, reaching over $20,000,000. That’s not too shabby for a goal of only $500,000. They blew it out of the water!

Are they still successful? Well, yeah, but not in the way you may think. They actually sold to FitBit. I call that success, but they no longer exist as their own company.

FlowHive

This one is not one that most would expect to explode onto the scene the way it did. The FlowHive Indiegogo campaign definitely generated some major buzz. The idea was to find a way to get the honey from bees without harming the bees.

Traditionally, hives are simply broken open to obtain the honey. This process can kill the bees. FlowHive developed a fake hive of sorts, made from reusable plastic. Bees make honey in it, and the honey flows through a spout out into the world. The bees are safe and fresh honey is ours for the taking.

Apparently, beekeeping is a growing interest. This campaign raised $14,000,000. Though they won’t disclose exact numbers, the bees at the top claim they are still buzzing along nicely.

CoolestCooler

The CoolestCooler was a Kickstarter campaign that came in at over $13.000,000 raised. The cooler boasted bluetooth and a blender among other super cool gadgets. Investors received a cooler for their donation toward the cause.

This one did run into some trouble when it wasn’t able to deliver investment rewards as quickly as promised, and there was actually a lawsuit. In the end, everything worked out and everyone got their rewards.

The cool gang at CoolestCooler says they are glad to put that behind them and get back to work. You can still buy one today, and it is definitely cool.

Kingdom Death Monster 1.5

Yeah, you read that right. What do you say to that? Well, apparently a lot of people said yes. They said yes to the tune of $12,000,000 on Kickstarter.

It’s a board game, if you are wondering. It did take a while to get the ball rolling, but investors finally got their copy. After production stopped resale values went upwards of $1,000. A later campaign promising updated material did just as well. Seems like a lot people love horror games.

Hit the jackpot and weather any recession with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

BauBox Travel Jacket

This jacket was set to be hot with 10 different go-go gadget like design elements like a drink holder and a neck pillow. They raised over $11,000,000 across 2 campaigns. While it had a bumpy start, including the jacket being available on retail sites before investors even got theirs, it is still selling today.

What Makes a Successful Crowdfunding Campaign?

There is never a guarantee, but there are a few things that most campaigns that reach epic status have in common. These things don’t guarantee success, but they can usually help you get over any bumps in the road if you also have a great business idea and everything else in place.

Without further ado, here are our best tips for how to become one of the top recession crowdfunding campaigns:

Research

You can’t go in blind. You have got to know what you are getting into. This is a risk, and research is your protection. It’s like you are jumping out of a plane, and research is your parachute.

Make sure you can meet demand. Know your market. Find out how much you actually need before you set your goal. Many a well-meaning entrepreneur has kicked off a campaign only to find the demand isn’t there or their goal fell short of what they actually needed to get started.

Show Them Something Real

If you are selling a product, have a sample to show investors. This is key to becoming one of the top recession crowdfunding campaigns. People are much more likely to jump onboard if they can actually see the ship. This one is so important that Kickstarter actually requires you to have a prototype to show investors.

Crowdfunding Platforms are not One Size Fits All

Once you know who your target audience is, you can decide if you would be best served by Kickstarter, Indiegogo, or some other, lesser known yet equally successful platform. If your audience doesn’t frequent the platform you are on, it won’t matter how great your idea or product is. They will never see it.

Do Not Be Afraid to Offer Incentives

But be sure you can deliver. Be fearless. Don’t hold back. I mean, don’t give away the company either, but if someone one is going to help you get started, they deserve something pretty epic for their trouble. Don’t you think? Go beyond a thank you note and be generous with what you offer as a reward for their support.

Goal Setting is Vital

Setting attainable goals is absolutely necessary to becoming one of the top recession crowdfunding campaigns. Make sure you crunch the numbers with actual facts before you set a fundraising goal. Be

certain you have production facilities on the line that can meet the timeline goals. Never set random goals with no clue what it will take to reach them or if they are even realistic to reach.

Be Extra with Marketing Materials

You can’t just throw something together. Videos need to be professionally edited. Social media needs to be specifically geared toward your audience. This means you, of course, need to know your audience well. Are they preppy? Cheesy? Hippy? Play to what they love.

All marketing has to be relatable to your core audience.

Does Being One of the Top Recession Crowdfunding Campaigns Guarantee Success?

No, it doesn’t. If you don’t have the other pieces of the puzzle in place, it doesn’t matter how much you raise, you won’t be able to make a go of it. Meeting your crowdfunding goals certainly helps however.

Just be sure you can meet expectations. If you make promises to investors, keep them. Get your arms around how long it will take to deliver and don’t promise anything any sooner than you can actually handle, taking the recession into account.

If there are problems, address them like a professional. Communication with investors goes a long way.

Hit the jackpot and weather any recession with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Have a Back Up Plan

Now, what if you do everything right and it still isn’t enough? This is where having solid business credit comes in. If you need to bridge the gap between your crowdfunding funds and capital needs, a good old-fashioned working capital loan or even business credit cards can get you there.

How to Get Business Credit

Start working on your business credit in conjunction with your crowdfunding campaign, if you haven’t already. It is never too early. The first steps are the easiest. You need to get separate contact information for your business. This includes an address and a phone number that are not your own. It also means getting a separate business bank account and using it for all business-related transactions.

Make certain your phone number is toll free, and list it along with your business address under the business name in the directories.

You also need a professional business website and dedicated email address. The email address should have the same URL as the website. Do not use a free service such as Yahoo or Gmail.

In addition to these simple things, there are a few other steps that will help further separate your business from yourself. These include formally incorporating, obtaining an EIN, and applying for a DUNS number.

When it comes to incorporating, you can choose from a corporation, an S-corp, or a limited liability corporation. They vary in cost and the amount of liability protection they offer, but they all serve the purpose of separating your business so you can build business credit equally.

You can obtain an EIN for free on the IRS website, and the DUNS number is free through the Dun & Bradstreet website.

What’s Next?

Work with starter vendors in the vendor credit tier. These are vendors that will offer net 30 invoice terms without a credit check, and then they will report your payments to the credit agencies. If you have laid the groundwork by establishing your business as separate from yourself and getting the necessary identifying numbers, you will now be well on your way to building business credit.

Top Recession Crowdfunding Campaigns are Possible

They really are, but they are not always enough. Follow these tips and you may meet all your crowdfunding goals. Start building business credit now though, so that if it isn’t enough, you will have something to fall back on. Funding a business is never easy, and a recession makes it even harder. Still, it is possible if you know where to start and where to go.

The post Top Recession Crowdfunding Campaigns: How to Push Your Recession Crowdfunding to the Top appeared first on Credit Suite.

Startup Crowdfunding: Top Tips to Make it Work

Startup crowdfunding is an awesome way to start a business for a few reasons. The top reason is likely the hope of starting a business without any debt. It rarely works out that way, but there have been a few lucky ducks that have blown goals out of the water and been able to use crowdfunding to totally fund their startup.

Try These Hot Tips to Make Startup Crowdfunding Work for You

The problem comes in when you are not one of those lucky ducks. Of course, that doesn’t mean you shouldn’t try startup crowdfunding. It just meant that you need to have a plan, execute it, and have a backup plan in case it doesn’t work out exactly like you hope.

What is Startup Crowdfunding?

Crowdfunding sites allow you to pitch your business to thousands of micro investors. Anyone who wants can donate, if you will, to the cause.

Investors pledge amounts on a broad spectrum depending on the campaign and the platform in use. They may give $80, they may give $150, or they may give over $500. It might just be $5, but any amount helps.

Though not always necessary, most entrepreneurs offer rewards to investors for their generosity. Most often, this comes in the form of the product the business will be selling. Different levels of giving result in different rewards. For example, a $50 gift may get your product A, and a $100 gift will get you an upgraded version of product A.

Find out why so many companies use our proven methods to get business loans.

Set Your Goal

This is not something that should be taken lightly. If you set your goal low, it won’t matter if you meet it or not. You still won’t have enough. If you set it too high, you may not get your money at all. That’s because some platforms will not release your funds until you meet your goal. There is a fine line you have to walk, and balance is necessary.

If you aren’t great with numbers, find someone who is to do some professional projections of how much you actually need to start your business.

Choose Your Platform

There are a few different startup crowdfunding platforms out there. Some are more popular than others. The key is to find the one with the audience that best fits your business.

Kickstarter

They are the largest crowdfunding platform. They have over 14 million backers and over 130,000 funded projects. Campaigns are for products and services such as:

Publishing
The arts and film
Comics and illustration
Design and tech

A prototype is necessary. Projects cannot be for charity, although nonprofits can use Kickstarter. Equity cannot be offered as an incentive.

Taboo projects and perks include anything to do with:

Contests and raffles
Cures and medicines
Credit services
Live animals
Alcohol
Weapons

There is a 5% fee on all funds which creators collect. Stripe, their payments processor, will also apply payment processing fees, which are roughly 3-5%. Campaigns that don’t make it don’t pay a fee. There are also fees of 3% + $0.20 per pledge. Pledges under $10 have to pay a discounted micropledge fee of 5% + $0.05 per pledge.

Indiegogo

Indiegogo has over 9 million backers. Their minimum goal amount is $500. They charge 5% platform fees and 3% + 30¢ third-party credit card fees. Fees are deducted from the amount raised, not the goal. As a result, if you raise more than your goal, you will pay more in fees. They do not accept PayPal.

Indiegogo is notable because they offer both fixed and flexible funding. This means, if you don’t hit your goal and you chose the flexible funding option, you can at least hold onto what you have. It’s actually the opposite of how crowdfunding normally works.

You cannot change your fundraising structure once the campaign starts. They recommend fixed funding if you need a minimum amount for your project. In addition, regular communications with donors is recommended if you choose fixed funding.

RocketHub

RocketHub is more for entrepreneurs who want venture capital. They give you an ELEQUITY Funding Room. This is where you can pitch your idea and see if it stimulates any interest from donors.

The platform is specifically for business owners working on projects in these categories:

Art
Business
Science
Social

If you reach your fundraising goal, you will pay a fee of 4%. In addition, you’ll pay a 4% credit card handling fee. But if you do not reach your goal, that fee jumps up to 8% plus the credit card handling fee. Of course, that means RocketHub is best for companies that are more confident they will make their goals.

Find out why so many companies use our proven methods to get business loans.

CircleUp

CircleUp is only for businesses. Their aim is to help emerging brands and companies raise capital to grow. However, companies must apply and show revenue of at least $1 million to get a listing on the site. Still, they will sometimes make exceptions.

Due to its more thorough process, CircleUp can be good for entrepreneurs who already have a somewhat established business. These are business owners who want both funding and guidance in order to take their businesses to the next level.

If your business gets approval for listing on CircleUp, the fee percentage comes from the total amount you raise.

CircleUp says (in its FAQ): “Our commission is intended to be generally consistent with what companies pay to investment bankers in the offline world for similar size fundraising rounds.”

GoFundMe

We can’t leave this one out because it is so well known. Truly, it’s probably not the best choice out there.

In general, GoFundMe is for individuals. Therefore, you might conceivably use it at the very beginning for startup crowdfunding. You will need to meet your fundraising goal in order to collect. The service charges 5% as a platform fee outside the United States. But there are no specific platform fees in America. Yet, there are payment processing charges of between 2 and 5%.

GoFundMe is often for personal causes, like people looking to cover their medical bills. Hence it may not be best for business funding. In addition, considering the large numbers of people who use GoFundMe for personal expenses, a business plea might get lost in the shuffle.

Work your Campaign

You’ve heard the adage “Plan to work and work your plan,” right? Well, it fits here perfectly. You have to have a campaign plan. Videos are popular but not necessary. Whatever ace you have up your sleeve, it has to make people want to support your business. They need to get excited.

Remember, your campaign has to match the personality of your audience. Does your main market fit in a certain generation? Maybe they are mostly 80s babies. Market to that with popular music and catch phrases from that era.

Are they an audience that loves campy, cheesy spoofs? Use that to your advantage! Specifically right now, if your business is going to help those affected by the pandemic, or the resulting economic downturn, play to that in your campaign!

Set Up Incentives

Of course, no one really ever wants to give something for nothing. Those who are excited about your business are going to be more likely to show their excitement monetarily if you offer great incentives.

Physical incentives are a pain in the neck. However, people love them and they will stand out. Plus, if a perk is used frequently, it will help to keep your company relevant.

Still, you also have to ship anything physical that you promise. You may be an American company, but that doesn’t mean all of your investors will be in the United States. International shipping is costly, even for small items. Therefore, if you offer physical perks, be clear about whether you will allow international donor addresses.

Yet, even if everything has to be shipped in the US, you are still left with a database of names and addresses, and some of them might have misprints or be incomplete.

Also, most campaigns offer more than one option. Then you have to remember what each person wanted. What if it is lost or damaged in the mail? These are all reasons to consider digital incentives. For example, for a house flipping campaign you could record video footage about home design or repair. For a long-haul trucking company, you could offer PDFs with personal recommendations on what to see and do in certain cities you service. A nail salon could send digital coupons for a free month of manicure touch ups.

The options are endless, especially when you consider all the possibilities for digital gift cards.

Have a Backup Plan

Regardless of how awesome your campaign is and how fabulous your incentives are, you need a backup plan. Tons of great businesses fail to reach their crowdfunding goal each year. Even if you follow all of these tips, that is still a possibility. Especially in this time of economic uncertainty, you need a backup plan.

If startup crowdfunding doesn’t work out, or only partially works out, your next step will likely be a business loan. There are a few options, but for startup business loans, you are likely going to be choosing between only a couple.

Traditional Term Loans

These are the loans that you go to the bank to get. As a business, your business credit score can help you get some types of funding even if your personal score isn’t awesome. That isn’t necessarily the case with this type of funding however.

With a traditional lender term loan, you are almost always going to have to give a personal guarantee. This means they will check your personal credit. If your personal credit score isn’t in order, you will likely not get approval.

What kind of personal credit score do you need to have in order to qualify for a traditional term loan? If you have at least a 750 you are in pretty good shape. Sometimes you can get approval with a score of 700+, but the terms will not be as favorable.

If you have really great business credit, your lender might be more inclined to be a little more flexible. However, your personal credit score will still weigh heavily on the terms and interest rate.

Of all of the loan types, this is the hardest to get. It is usually worth the trouble though if possible, because it typically offers the best rates and terms.

SBA Loans

These are traditional bank loans, but they have a guarantee from the federal government. The Small Business Administration, or SBA, works with lenders to offer small businesses funding solutions that they may not be able to get otherwise for a number of reasons. Because of the government guarantee, lenders are able to relax a little on certain requirements.

In fact, it is possible to get an SBA microloan with a personal credit score between 620 and 640. These are very small loans, up to $50,000. They may require personal collateral as well.

The trade-off with SBA loans is that the application progress is lengthy. There is a ton of red tape connected with these types of loans.

Find out why so many companies use our proven methods to get business loans.

Bonus Tip: Go Ahead and Build Fundability While Working On Your Startup Crowdfunding Campaign

Here’s a bonus for you. Startup crowdfunding is just one of many business funding options. The truth is, you are almost certainly going to need to use another option at some point. While your startup crowdfunding campaign is going, regardless of how successful it seems to be, work on fundability. This is the ability of your business to get funding. Even if you meet your goal, you are likely to need financing at some point in the future. By starting the work to make your business fundable, you help ensure you can get the financing your need to run and grow your business far into the future.

Startup Crowdfunding: It May Not Work, But These Tips Will Increase Your Chances

Startup crowdfunding is a legit option. However, it is impossible to tell if it will work or not. There are some things to do to increase the probability of a successful campaign. Still, it is best to know your options in case it doesn’t work. In the meantime, work on building fundability so that whatever type of funding you end up needing, you’ll be more likely to get it.

The post Startup Crowdfunding: Top Tips to Make it Work appeared first on Credit Suite.

Reward Based Crowdfunding vs. Equity Crowdfunding

Crowdfunding can be a great option for funding a business, if you run a successful campaign. The problem is, though some campaigns are very successful, many are not. It helps to understand the different options available.

Which Option is Best for Your Business: Reward Based Crowdfunding or Equity Crowdfunding?

There are many benefits to crowdfunding, the most popular being the debt free financing of your business. However, there are a couple of different types of crowdfunding, and there are even more platform options. Some options work better for certain types of businesses than others.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

What is Reward Based Crowdfunding

Reward based crowdfunding is crowdfunding in which backers receive a reward for their investment. This could be something as simple as a thank you note or as elaborate as the actual product. For example, a jewelry maker may offer a free pair of earrings.

One smart jacket company offered free coats with investment, and a cooler company offered free coolers. One word of warning, be sure you can keep your promises. More than one company has gone south or at least ended up in major trouble because they could not keep their promise to investors.

What are Some Benefits of Reward Based Crowdfunding?

The biggest benefit of reward based crowdfunding is that it’s one of the cheapest ways to raise capital. There is no collateral requirement and no credit check or prior business experience required. There is no need to have professional financial or legal help, as the process is simple. You do not give up any equity or control in your company, and you get tons of exposure to your audience on the front end.

That said, it’s not all sunshine. Many, if not most, campaigns do not raise enough funds to fully finance the business. That means other means of financing have to be utilized. Also, some platforms will not allow you to access any of the money if you do not reach your goal.

Reward Based Crowdfunding vs. Equity Crowdfunding

The major difference in these two types of crowdfunding is what investors get for their investment. With reward based crowdfunding, investors receive some incentive for their donation that is not equity in the company. With equity-based crowdfunding, the investor receives equity, or a share in the company.

Another difference is that, as a general rule, equity-based crowdfunding brings in larger amounts of money. This is because it draws a different type of investor. The question then becomes, why doesn’t everyone choose that? The key is, some businesses are better suited for equity-based crowdfunding and some are better suited for reward based crowdfunding.

Is Reward Based Crowdfunding Best for Your Business?

So, which types of businesses do best with crowdfunding based on rewards rather than equity? Typically, this works best for startups in creative fields. Those that do not qualify for traditional business loans, but have a strong project. Sometimes these businesses just want to test the market, and a crowdfunding platform is a great place to do that.

It doesn’t really work well for those businesses with a complicated product or service. It can be hard to explain the value of these types of companies to the masses. This type of funding tends to work best for businesses that offer:

New Local Services

If you think about it, this makes sense. If you want to open a local business, especially in an area where there is a direct need, it could do well with small business crowdfunding. Local Lift is designed specifically for local businesses to request funding, gauge interest, and even build a customer base before opening.

New High-Tech Gadgets

This doesn’t mean just a new take on what is already out there. Rather, this is something that is completely unique. That is what is going to get the most support. Also, it needs to have a working prototype and there needs to be research behind it.

Unique Inventions for the Home

This category gets a ton of support, especially for items that solve everyday problems. For example, the fly killing salt shotgun and the wet diaper sensor have seen great success!

New Tools for Cooking at Home

These are gadgets that will let you do something at home that you normally can’t. An example is carbonating your own soda. Another one is something that lets you cook things faster, or easier. Items that serve multiple purposes are another option. Maybe an easy way to make sushi at home? New kitchen tools for the home are often successful.

Platforms for Reward Based Crowdfunding and Equity Crowdfunding

How do you get started with crowdfunding of any type? There are a number of platforms out there. Some are only for offering rewards. Others allow you to offer equity as well. The most popular are Kickstarter and Indiegogo, but they are not the only players in the game.

Kickckstarter

With over 14 million backers, Kickstarter is one of the largest crowdfunding platforms in the world. They boast over 130,000 funded projects. These include products and services related to:

Publishing
The arts and film
Comics and illustration
Design and tech

Kickstarter requires you to have a prototype. In addition, projects cannot be for charity. However, nonprofits can use Kickstarter. This is one platform that does not allow equity crowdfunding.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Other banned projects and perks include anything to do with:

Contests and raffles
Cures and medicines
Credit services
Live animals
Alcohol
Weapons

Kickstarter will collect a 5% fee on all funds. They also use a payment processor, Stripe, that applies payment processing fees (roughly 3-5%). Unsuccessful campaigns do not pay a fee. There are also fees of 3% + $0.20 per pledge. Pledges under $10 have to pay a discounted micro pledge fee of 5% + $0.05 per pledge.

Indiegogo

Indiegogo has over 9 million investors. They do not allow campaign goals below $500. Also, they charge 5% platform fees and 3% + 30¢ third-party credit card fees. Note that fees are deducted from the amount raised, not the goal. As a result, if you raise more than your goal, you will pay more in fees. They do not accept PayPal.

Indiegogo is noteworthy because they offer flexible financing in addition to fixed financing options. So, if you do not make your goal and you chose flexible funding, you can at least hold onto what you collected. This is the opposite of how crowdfunding normally works.

RocketHub

RocketHub is better suited for those who need venture capital. They give you an ELEQUITY Funding Room. There, you can pitch your idea and see if it stimulates any interest from donors.

This platform is specifically for business owners working on projects related to:

Art
Business
Science
Social

If you achieve your fundraising goal, you will pay a fee of 4%. In addition, you’ll pay a 4% credit card handling fee. But if you do not reach your goal, then that fee jumps up to 8% plus the credit card handling fee. That means RocketHub is best for companies that are more confident they will make their goals.

CircleUp

CircleUp aims to help up and coming brands and companies raise capital for growth projects. However, companies must apply and show revenue of at least $1 million to get a listing on the site. That said, the platform will sometimes make exceptions.

CircleUp can be good for those who already have a somewhat established business. That includes business owners who want both funding and guidance in order to take their businesses to the next level.

If your business gets approval for listing on CircleUp, the fee percentage comes from the total amount you raise.

GoGetFunding

GoGetFunding has been around since 2011. They let fundraisers keep the money they raise, regardless of whether they meet their target. If your business idea is unproven and you are unsure of whether you can meet your funding needs with a crowdfunding for business campaign, flexible funding can be a great option.

They charge a 6.9% fee. This is pretty high, but it includes both the platform fee and the payment processing fee. Therefore, it is actually more cost-effective than many other crowdfunding for business options.

Crowdfunder

With Crowdfunder, investors purchase equity in promising companies. They consider campaigns to be deals, and its donors are investors. Self-start listings are $499/month. Self-start plus is $999/month. In their community, there are over 15,000 investors and 200,000 startups.

Fundable

This is a crowdfunding for business platform that allows companies to raise funds from investors, customers, and friends. They have over $80 million in funding commitments.

Fundable does allow equity crowdfunding campaigns. Also, they charge $179 per month to raise funds. Fees on rewards are: 3.5% + 30¢ per transaction. They do not charge success fees.

Fundly

Fundly allows for crowdfunding for creative ventures. If your business has a creative lean, this might work for you.

There is no minimum amount to fundraise or to keep money you raise. You can usually withdraw payments within 24 – 48 hours of the donation. In addition, they offer automatic transfers. It is free to create and share an online fundraising campaign.

Yet, Fundly will deduct a 4.9% fee from each donation you get. A credit card processing fee of 3% is also taken out from each donation. Also, there are nonspecific automatic discounts for larger campaigns.

Tips for a Winning Campaign

There is no such thing as guaranteed success. These steps can help make sure you give yourself the best chance possible when it comes to fundraising through crowdfunding.

Research

You have to know your market and what demand looks like. The only way to find that out is to research. Figure out how much money you actually need before you set your goal. Lots of business owners have started crowdfunding campaigns only to find the demand isn’t there or their goal fell short of the actual need.

Make a Prototype

Truly, you have to have a sample to show investors. It’s important. People are almost always more likely to let go of money if they can see something tangible. This is so vital that Kickstarter actually requires you to have a prototype to show potential investors

Think About Which Platform You Should Choose

Once you know who your target audience is, you can determine if you would be best served by Kickstarter, Indiegogo, or another, lesser known platform. If your audience doesn’t use the platform you are on, it won’t matter how great your idea or product is. They’ll never see it.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Give Good Stuff!

This is huge. Don’t make promises you can’t keep, and don’t give away the company. Still, if someone one is going to help you get started, they deserve something amazing. Offer more than a thank you note. Be bold with what you offer as a reward for their support, without harming your success.

Goal Setting is a Must

Setting goals you can reach is necessary to success. Make certain you look at the numbers in relation to actual facts before you set a fundraising goal. Be certain you have production facilities on the line that can meet the timeline goals. Do not randomly set goals with no clue what it will take to reach them.

Marketing Matters

You can’t just throw any old campaign together. If you create a video, it needs to be professionally edited. Any social media should be specifically targeted toward your audience. If they are a techy audience, pull out all the tech stops. If they are an older crew, they may need less fanfare and a more straightforward approach. The fact that videos work well reigns pretty much across audience lines however, so definitely consider a video.

Is Reward Based Crowdfunding for Your Business?

The answer is, it depends. It is worth a shot for many businesses, but for sure it should not be counted on as a total funding solution. There are some campaigns that raise all the money they need, but that is usually the exception rather than the rule. Most have to explore other funding options as well. However, you will have a much higher chance of success if you choose the right type of crowdfunding, the right platform, and the perfect marketing plan for your specific business.

The post Reward Based Crowdfunding vs. Equity Crowdfunding appeared first on Credit Suite.

10 Crowdfunding Platforms for Recession Funding, Part 1

Not All Crowdfunding Platforms for Recession Funding Are Alike

Are crowdfunding platforms for recession funding confusing you? Are you thinking of crowdfunding your business? There are several platforms out there with differing requirements. And they are not even close!

Getting working capital to grow your business doesn’t have to be hard. Many companies these days turn to crowdfunding. A lot of these options

will work for startup ventures.

There Are No Guarantees, Even with Crowdfunding Success

For some companies which crowdfund, the rewards are great. As per the Crowdfunding Blog, the single most successful crowdfunding campaign was for the Pebble Time Smartwatch. So this was as of November of 2018. But before you run out and try to buy one, note one thing. They are now a part of FitBit.

As in, they went out of business in July of 2018. So this is a business which raised over $20 million in 2015! That is no typo. And in point of fact, Pebble holds three of the top six spots in the biggest crowdfunding successes of all time. Together, these three crowdfunding campaigns raked in a staggering $43.39 million.

This is about $8 million more than the town of Huntington, New York (population 203,264) budgeted for highways in 2018. Yes, really.

So there is one thing that should be clear to all. Runaway crowdfunding success is no guarantee whatsoever of actual success.

But now it is time to get to the 10 crowdfunding platforms for recession funding that you should know about.

What frustrates you the most about funding your business? Tell us in the comments.

Quick Tips About Crowdfunding: How Much?

Your very first decision should be: just how much do I need to crowdfund? If you need $1 million, you are going to need to crowdfund more than that. Why? Because that is how crowdfunding platforms for recession funding make their money– they take a percentage of any money you can raise. Thus, you will need to take that into consideration. Crowdfunding percent charges vary from 4% to 10%.

Quick Tips About Crowdfunding : What Should I Offer for Perks?

Check with the crowdfunding platforms for recession funding which interest you the most – just in case they don’t allow perks.

But for many crowdfunding platforms for recession funding, yes, you will have to offer perks to your donors. Perks can take many forms– buttons, tees, book marks – every one of those are possible tangible perks. Consider a perk format which can sync with your business. If you sell homemade jam, then perhaps create a unique flavor just for the campaign, and offer bigger and bigger-sized jars depending on donation amount.

If you are a horseback riding stable, offer a complimentary lesson or a postcard with a favorite horse’s image on it, or something like that. Does your startup flip houses? Then consider offering a coupon to a neighborhood home supply company or the like. Be sure to work with them beforehand, of course.

Perks are only limited by your imagination, so be creative! And if you can offer something which people will use a lot, then so much the better.

What frustrates you the most about funding your business? Tell us in the comments.

Pro Tip on Perks

Physical perks are a massive pain! A lot of people love them, and they will stand out. Plus, if a perk is used regularly, it will help to keep your company at the top of your backers’ minds.

However, you also have to ship physical perks. You may be an American company, but that doesn’t mean all of your backers will be in the United States. International shipping is extremely expensive, even for small items. So if you offer physical perks, specify whether you will allow international donor addresses.

But even if everything has to be shipped in the US, you are still left with working with a data base of names and addresses, and a few of these might have misprints or be incomplete.

And you would usually be working with a range of available perks. Did Jane want the stuffed teddy bear or the book mark? Did Alan want the pennant or the tee shirt? Do Jane and Alan live at the same address so perhaps you could mail their perks out together? What if a perk is lost or broken in the mail? And what if it injures someone?

Because of this, if you can do it, you might want to try for digital perks. For a house flipping startup, you might record video footage about home design or repair. For a long haul trucking company, you could offer PDFs with personal recommendations on what to see and do in certain cities you service. And for a nail salon, maybe offer digital coupons for a free month of manicure touch ups.

Great Crowdfunding Platforms for Recession Funding: 1. Kickstarter

They are the biggest crowdfunding platform. They have over 18 million backers and over 180,000 funded projects. Campaigns are for products and services such as:

Publishing
The arts and film
Comics and illustration
Design and tech

You will need to have a prototype. Projects cannot be for charity, although nonprofits can use Kickstarter. And you can’t offer equity in a company as a perk.

Taboo projects and perks include anything to do with:

Contests and raffles
Cures and medicines
Credit services
Live animals
Alcohol
Weapons

There is a 5% fee on all funds which creators collect. Stripe, their payments processor, will also apply payment processing fees (roughly 3-5%). Campaigns that don’t make it don’t pay a fee. There are also fees of 3% + $0.20 per pledge. Pledges under $10 have to pay a discounted micropledge fee of 5% + $0.05 per pledge.

Great Crowdfunding Platforms for Recession Funding: 2. Indiegogo

Indiegogo has over 9 million backers. Their minimum goal amount is $500. They charge 5% platform fees. There may be third-party credit card fees. Fees are deducted from the amount raised, not the goal. So if you exceed your goal, you will pay more in fees. They do not take PayPal.

Indiegogo is notable because they offer both fixed and flexible funding. This means, if you do not make your goal – assuming you chose flexible funding – you can at least hold onto what you collected. Hence it is the opposite of how crowdfunding normally works.

You cannot change your fundraising structure from fixed to flexible (or vice versa) once the campaign starts. They recommend fixed funding if you need a minimum amount for your project. Indiegogo recommends regular communications to donors if you choose fixed funding.

Great Crowdfunding Platforms for Recession Funding: 3. Patreon

Patreon is more for entrepreneurs in the arts space. With Patreon, fans pay your business on a monthly basis. Get more regular funding, and that’s always better for budgeting. Develop a recurring, dependable income stream while connecting directly with fans.

Pay 5% for Lite. For Patreon Pro, pay 8%. And for Patreon Premium, pay 12%.

What frustrates you the most about funding your business? Tell us in the comments.

Great Crowdfunding Platforms for Recession Funding: 4. CircleUp

CircleUp is only for businesses. Their aim is to help emerging brands and companies raise capital to grow.

CircleUp Growth Partners is CircleUp’s fund currently making direct equity investments into high growth, early stage consumer companies. To qualify, a business must have revenue of $1 – $15 million, raising $1 – $10 million in growth equity. CircleUp Growth Partners is looking for innovative brands that are creating new categories or disrupting existing categories. They want to work with entrepreneurs with a strong vision and unwavering passion for their product.

You can also get a line of credit from CircleUp.

CircleUp says (in its FAQ): “Our commission is intended to be generally consistent with what companies pay to investment bankers in the offline world for similar size fundraising rounds.”

Great Crowdfunding Platforms for Recession Funding: 5. GoFundMe

Because the name is known, we should mention GoFundMe. But it’s probably not the best choice out there.

In general, GoFundMe is for individuals. Hence you might conceivably use it at the very beginning of your starting up a business. You will need to meet your fundraising goal in order to collect. There are no specific platform fees in America. Industry-standard transaction fees apply and vary depending on the country that the campaign was created in.

GoFundMe is often for personal causes, such as people looking to cover their medical bills. Hence it may not be best for business funding. In addition, given the large numbers of people who use GoFundMe for personal expenses, be aware that a business plea might get lost in the shuffle.

What’s in Part 2 of the 10 Crowdfunding Platforms for Recession Funding You Should Know About?

In Part 2, we’ll round out our list of 10. Discover this new way to get funding for your business.

The post 10 Crowdfunding Platforms for Recession Funding, Part 1 appeared first on Credit Suite.

10 Crowdfunding Platforms for Recession Funding You Should Know About, Part 2

Check Out These 10 Crowdfunding Platforms for Recession Funding You Should Know About

These 10 crowdfunding platforms for recession funding have been catching our eye lately.

Have you been thinking of crowdfunding your business? There are several recession crowdfunding platforms out there with differing requirements. These are the recession crowdfunding platforms you should know.

Getting working capital to grow your business doesn’t have to be hard. Many companies these days turn to recession crowdfunding platforms. A lot of these options will work for startup ventures. The last 5 of our top 10 crowdfunding platforms for recession funding are a bit more obscure. But first, here are a few tips to help you with your campaign.

Quick Tips About Crowdfunding: Your Campaign

Your campaign’s success is far from guaranteed. But you can capitalize on a few proven approaches. First off, consider these four emotions that you need to engender in donors. Use one or more of them as the focal point of your campaign as a starting point.

Scarcity

If you have thousands of something or other to supply as a perk, it will not be as desirable. If you only have a few copies of a specific perk, that will instill a feeling in some potential donors that they just have to have it. Do this with your larger donation levels only. Therefore, you might want to establish a perk/donation level system similar to this:

Donation Level	Number of Perks
Lowest	1,000
Second lowest	500 (reward also incorporates lowest level reward)
Second highest	50 (reward also includes two lower level rewards)
Highest	10 (reward also incorporates all other levels’ rewards)

Remember: a lot of variety in physical perks will make fulfillment a lot harder, so don’t work with greater than maybe five separate varieties of physical perks– and even that is pushing it.

Building scarcity into your perk tiers is a great way to add perceived value to the perks which attach to your higher level donations.

Urgency

The first two and last two days of a crowdfunding campaign are pretty much always the days with the biggest payoffs. Often, making the campaign longer doesn’t make you significantly more money. So why not open a campaign for only a week? Do not let donors feel they can contribute any old time they feel like it.

Novelty

If you are offering the same old thing as a thousand other places, no one will want to make a donation. Your widget has got to be hotter, cheaper, lighter, or more resilient. Your food should be reduced in calories or higher in nutrition or better-tasting. Or your professional services need to be delivered better or quicker, by friendlier and more skilled employees. And they should come with a money back guarantee your competition does not provide.

Not sure about your own personal creativity? Then talk to creative people you know, and listen to what they say. They might have amazing ideas and it certainly never hurts to ask.

Cool factor

Is your product a work of art? Is it a new, gadget-like innovation? Then it may have a coolness aspect which you can construct your campaign around. But do not be discouraged if it isn’t! These days, some of the most unforgettable advertising campaigns are based around a product the majority of people found uninspiring not ten years ago– insurance.

So house flipping could boast a cool factor if you show off flipping in a neighborhood where a celebrity lives or once lived. A nail shop can show off coolness with exciting new designs not found anywhere else. And a long haul trucking company can showcase a cool factor with some of the more unusual products you’ve hauled.

Quick Tips About Crowdfunding: Crowdfunding Strategy

A few words on strategy:

Your Pitch Video Must be Great

Use an expert to film it and develop the script. Can’t pay for experts? Then try schools, both pupils and educators. Your script doesn’t need to be verbatim but you should have points you wish to make and not babble. Write a script and stay with it. This is not the right time to ad-lib.

If You Have Tangible Evidence of Your Project, then Show it

Put it in your campaign video and on your campaign page. A number of people are naturally doubtful about crowdfunding. An image and a tangible thing will go a long way to assuring them that your project isn’t vaporware.

Manners Matter

Say please, thank you, and you’re welcome to everyone. Use these magic words in your pitch and in your communications with your donors, even in the cover letters you deliver with your perks (even internet perks can include a cover email). You don’t need to be servile, but you absolutely must be diplomatic.

Stretch Goals Should be a Combination of Readily Achievable and Pie in the Sky

If you are crowdfunding for $100,000, a reasonably easy to attain stretch goal is $125,000. Pie in the sky going to be more like $300,000.

Make it abundantly clear what you will do with any added money if you are fortunate enough to get it. Will you buy the property your startup is in? Employ five more people? Replace your old equipment? Launch a brand-new market on another continent? Let your donors know what you are pursuing, so they can dream with you.

Be Gracious if Your Campaign Fails

You may not receive enough to make an appreciable dent in your funding requirements. So give your donors a stake in and an inside look at your business. This will enable them to feel invested. Even if your crowdfunding campaign concludes does not mean a donor cannot send a check or buy extra goods or services. If that happens, then politeness is essential.

Line up the Most Significant and Most Dependable Donors You Can Before You Start

Tell these people to postpone handing over their $1,000 or $10,000 donation till you start your campaign.

And ask them (nicely!) to release their donation during either the first or last day of the campaign.

Make the most of the novelty factor of the first day of the campaign, or the urgency factor of the very last. Just like a busker with a couple of her own bucks in her hat, to motivate people to toss in a few bucks for a song, you want your biggest donors to show other donors that they believe in you and in your project. And you also want them to suggest your other donors that they had best get in on investing in your startup before the opportunity ends.

Share Your Campaign on Social Media

And ask your family and friends to do so, too. Tweet the link. Incorporate it as a Facebook status. Make it a Tumblr post or a snap on Snapchat or create a blog post about it. Ask your network to publicize the link.

The most effective technique to get your network to help you out is by helping them in return. If your relative’s rock band is on Facebook, share their page, or tweet about it.

Be a collaborative member of your own personal network. Then your contacts will be more likely to help you out when you ask.

And rerun these social media postings. Considering time zones and our all-too hectic lives, people may not see your message the first time around. Mix it up and deliver it at odd hours. You can oftentimes use scheduling software such as Hootsuite for this. This includes what is the middle of the night where you live.

In Part 1, we covered 5 great crowdfunding sites you should have on your radar. Here are 5 more to round out 10 crowdfunding platforms for recession funding you should know about. But now we’re going a little more obscure.

More About Our Favorite 10 Crowdfunding Platforms for Recession Funding: 6. GoGetFunding

GoGetFunding has been around since 2011. It lets fundraisers keep the money they raise, whether they meet their target or not. Flexible funding can be a great option if your company is a somewhat unproven idea and you are unsure whether you will be able to meet your funding needs.

GoGetFunding charges a fee of 6.9%. This somewhat high fee includes both the platform fee and the payment processing fee. Hence this option is actually somewhat more cost-effective than many other crowdfunding options.

What frustrates you the most about funding your business? Tell us in the comments.

More About Our Favorite 10 Crowdfunding Platforms for Recession Funding: 7. Crowdfunder

Crowdfunder works as what’s called equity crowdfunding. This is where investors purchase equity in promising companies.

Crowdfunder treats its campaigns as deals, and its donors as ‘investors’. Pay a one-time fee to make your campaign discoverable.

Starter listings are $299/month. Premium listings are $499/month. Premium Plus is $999/month.

Types of business which cannot use Crowdfunder include:

Guns/Firearms
Tobacco/Cigarettes/Cannabis
Pyramid Marketing
Adult Products & Entertainment
Gambling
Contests and Raffles
Illegal Substances/Drugs

More About Our Favorite 10 Crowdfunding Platforms for Recession Funding: 8. Fundable

Fundable is a business crowdfunding platform which lets companies raise capital from investors, customers, and friends. Create an equity or a rewards-based campaign.

In their first year, they generated over $80 million in funding commitments.

Fundable allows equity campaigns.

They charge $179 per month to fundraise. Fees on rewards are: 3.5% + 30¢ per transaction. They do not charge success fees.

More About Our Favorite 10 Crowdfunding Platforms for Recession Funding: 9. AngelList

At AngelList, you can invest in a startup or even get a job at one. So it can be, essentially, an index fund for startups. Hence if a larger, established company wanted to offer retirement investment opportunities geared to investing in startup companies, AngelList would be a place where they could go.

Hence AngelList is not exactly a business crowdfunding site. Rather, it is a way to connect investors to an array of startup investment opportunities. So investors can try for returns on FinTech or even cryptocurrencies. One of their better-known investments is a business administration site called HoneyBook.

What frustrates you the most about funding your business? Tell us in the comments.

More About Our Favorite 10 Crowdfunding Platforms for Recession Funding: 10. Fundly

Not quite one of our 10 crowdfunding platforms for recession funding, Fundly does allow for crowdfunding for creative ventures. Therefore, if your business has a creative bent, you might find a home there.

Fundly imposes no minimum amount to fundraise in order to keep any raised funds. You can generally withdraw payments within 24 – 48 hours of the donation. They also allow for automatic and scheduled transfers. It is free to create and share an online fundraising campaign.

However, Fundly will deduct a 4.9% fee from each donation you get. A credit card processing fee of 3% is also taken out from each donation. Plus there are nonspecific automatic discounts for larger campaigns.

What frustrates you the most about funding your business? Tell us in the comments.

Takeaways

So for small business owners who want to crowdfund, it pays (quite literally!) to read the fine print. Large and well-known sites such as Kickstarter may get more attention from donors. This is often because they are better known. However, smaller sites on our list of 10 crowdfunding platforms for recession funding – like Fundable – might offer better rates and more personal service.

In the end, though, it is all about the funding. This is true for all of the recession crowdfunding platforms you should know. If your company can meet its goal, then any platform is going to be terrific. If your business cannot, then you will probably do better looking for another form of funding. This includes building business credit. Discover this new way to get funding for your business.

The post 10 Crowdfunding Platforms for Recession Funding You Should Know About, Part 2 appeared first on Credit Suite.

All You Need to Know About Business Crowdfunding

Business crowdfunding is a legitimate business funding option. Not only can it work well for startups, but it is an option for growth and expansion projects as well.

You Need Other Funding Options for When Business Crowdfunding Doesn’t Cut It

However, crowdfunding isn’t a sure thing by a long shot. In fact, it is pretty risky if it is all you have. Of course, you only lose what you put into the campaign, but you definitely need a backup funding plan. What do you need to know about business crowdfunding?

What is Business Crowdfunding?

While the average person that wants to start a business needs funding, it is not always possible to find one or two large investors. With crowdfunding, you can a lot of investors to fund your business $5 and $10 at the time.

There are many crowdfunding sites, but the most popular are Kickstarter and Indiegogo. The platforms are similar but there are some important differences. The most obvious is the timing of when you actually receive the funds that others invest in your company.

Demolish your funding problems with 27 killer ways to get cash for your business.

Kickstarter requires a preset goal, and you do not receive your funds until you reach your goal. For example, if you set a goal of $10,000 when you start your campaign, you will not receive any money that investors offer up until you reach that $10,000.

Indiegogo requires a goal as well, but they offer the option to receive funds as you go if you would rather. They also have an option called InDemand. This program allows you to continue raising funds after your original campaign is over without starting a whole new campaign, like an extension.

More Crowdfunding Sites

There are other crowdfunding sites out there also. Different ones work better for certain businesses and vendors. To figure out which one you might work best for your needs, you’ll have to do some research. Keep in mind your type of business and the specific business each one appeals too.

Crowdfunding is a good starting point for a new business, but it shouldn’t be relied upon completely. You need a backup plan. Only a small percentage of crowdfunding campaigns are successful. Furthermore, consider how the economy is doing before you rely too heavily on crowdfunding. If the economy isn’t strong, people will not be as likely to invest.

Examples of Successful Business Crowdfunding Campaigns

Though not all business crowdfunding campaigns are successful, some are incredibly profitable. Here are some of the most successful.

Pebble SmartWatch

Pebble actually has several of the top 10 campaigns ever on Kickstarter. Their 2nd campaign is one of the highest funded ever, reaching over $20,000,000. That’s not too shabby for a goal of only $500,000. They blew it out of the water!

Are they still successful? They are, but not in the way you may think. They actually sold to FitBit. So I call that success.

FlowHive

This one is not one that most would expect to be as profitable as it was. The FlowHive Indiegogo campaign was buzzworthy for sure. The idea was to find a way to get the honey from bees without harming the bees.

Traditionally, hives are simply broken open to get the honey. This process can kill the bees. FlowHive developed a fake hive, made from reusable plastic. Bees make honey in it, and the honey flows out through a spout. The bees are safe and fresh honey is readily available.

Apparently, beekeeping is growing in interest. This campaign raised $14,000,000. Though they won’t disclose exact numbers, those in charge say they are still in the black.

CoolestCooler

The coolest cooler was a super cool Kickstarter campaign that came in at over $13.000,000 raised. The cooler boasted bluetooth and a blender among other things. Investors received a cooler for their donation toward the cause.

This one did run into some trouble when it wasn’t able to deliver investment rewards as quickly as promised and there was actually a lawsuit. In the end, everything worked out and everyone got their rewards.

The cool gang at CoolestCooler says they are glad to put that behind them and get back to work. You can still buy one today.

Kingdom Death Monster 1.5

Strange name, huh? What do you say to that? Apparently a lot of people said yes. They said yes to the tune of $12,000,000 on Kickstarter.

It’s a board game, if you didn’t already know. It did take a while to get the get going, but investors finally got their copy. After production stopped, resale values went upwards of $1,000. A later campaign promising updated material did just as well. Seems like a lot people love horror games.

Demolish your funding problems with 27 killer ways to get cash for your business.

BauBox Travel Jacket

This jacket was set to be hot with 10 different design elements, like a drink holder and a neck pillow. They raised over $11,000,000 across 2 campaigns. While it had a bumpy start, including the jacket being available on retail sites before investors even got theirs, it is still selling today.

How to Launch a Successful Business Crowdfunding Campaign

There is no such thing as guaranteed success, but following these steps can help make sure you give your business the best chance possible.

You Have to Research

You need to know your market and what demand looks like. The only way to figure that out is to research. Find out how much you actually need before you set your goal. Many business owners have started business crowdfunding campaigns only to find the demand isn’t there or their goal fell short of what they actually needed to get started.

You Need a Prototype

If you are selling a product, you have a sample to show investors. This is key. People are much more likely to invest if they can see something tangible. This is so important that Kickstarter actually requires you to have a prototype to show potential investors

Consider Your Platform

Offer Good Rewards

Rewards are vital. However, be certain you can deliver. Also, don’t give away the company. But if someone one is going to help you get started, they deserve something pretty epic. Go beyond a thank you note. Be fearless with what you offer as a reward for their support, without harming your success.

Have Something to Reach For

Setting attainable goals is absolutely necessary to success. Make sure you look at the numbers in light of actual facts before you set a fundraising goal. Be certain you have production facilities on the line that can meet the timeline goals. Don’t set random goals with no clue what it will take to reach them, or if they are even realistic to reach.

Make Your Marketing Pop

You can’t just throw something together. If you do a video, it needs to be professionally edited. Any social media needs to be specifically geared toward your audience. If they are a cheesy, campy audience, then that is how your social media and videos need to come off.

If they are an audience is more sophisticated, your campaign needs to be as well.

Other Funding Options

Remember, you need a backup plan in case business crowdfunding doesn’t work out. Here are some options.

Traditional Term Loans

With a traditional lender term loan, you are almost always going to have to give a personal guarantee. As a result, they will check your personal credit. If it isn’t good enough, you will not get approval.

What kind of personal credit score do you need to have to qualify for a traditional term loan? If you have at least a 750 you are in pretty good shape. Sometimes you can get approval with a score of 700+, but the terms will not be as favorable.

If you have really great business credit, your lender might be more inclined to be a little more flexible. However, your personal credit score will still weigh heavily on the terms and interest rate.

Of all of the available business funding types, this is the hardest to get. It is usually worth the trouble however, because it often has the best rates and terms.

SBA Loans

These are traditional bank loans, but they have a guarantee from the federal government. The Small Business Administration, or SBA, works with lenders to offer small businesses funding solutions that they may not be able to get based on their own credit history. Because of the government guarantee, lenders are able to relax a little on the personal credit score requirements.

In fact, it is possible to get an SBA microloan with a personal credit score between 620 and 640. These are very small loans, up to $50,000. They may require personal collateral as well.

Every rose has its thorn, and SBA loans are no different. The application progress is lengthy. There is a ton of red tape to get through due to the government affiliation.

Business Line of Credit

This is basically the traditional lender’s version of a business credit card. The credit is revolving, meaning you only pay back what you use, just like a credit card. Rates are typically much better than a credit card. The application and approval process, however, is more similar to that of a traditional term loan.

If you need revolving credit and can qualify for a term loan, this is a good option. It is great for bridging cash gaps and covering short term expenses without the high credit card interest rates.

Still, there are no cash back rewards or loyalty points. This makes some business owners prefer business credit cards in some cases, despite higher interest rates.

Invoice Factoring

If you are an established business with accounts receivable, invoice factoring is one of the available business funding types that you have access to. This is where the lender buys your outstanding invoices at a premium, and then collects the full amount. You get cash right away, without waiting for your customers to pay the invoices.

It is a good option if you need cash fast, or you do not qualify for other funding types. The interest rate varies based on the age of the receivables.

Private Lenders

Private lenders are lenders other than traditional banks and credit unions that offer terms loans. Generally, they operate online. The difference between these and traditional lenders is that the loans have less strict approval requirements and a much faster application process. Most often you can simply apply online, get approval in as little as 24 hours, and the funds are in your account within 24 to 48 hours after approval.

Grants

While there are not a lot of these out there, they are more common than you probably think. Usually, they are offered by professional organizations. There are some government grants available also. Competition can be tough, but they are definitely worth a shot if you think you may qualify.

Requirements

Requirements vary from grant to grant. Also, most are only awarded to a certain number of recipients. Still, they are a good option, especially if you fall into one of these basic categories.

Demolish your funding problems with 27 killer ways to get cash for your business.

Women owned business

Minority owned business

Businesses run by veterans

Businesses in low income areas

There are also some corporations that offer grants in a contest format. They do not require much other than that you meet the corporation’s definition of a small business and win the contest.

Business Crowdfunding is a Legitimate Option

Business crowdfunding can be fabulous. You can get all the funds you need to start or grow your business. The best part is, you don’t have to pay any of it back. However, it doesn’t always work. Often campaigns do not reach goals, or they do, but it isn’t enough. It is definitely worth a shot, but you need to know your other options as well.

The post All You Need to Know About Business Crowdfunding appeared first on Credit Suite.

All You Need to Know About Business Crowdfunding

Business crowdfunding is a legitimate business funding option. Not only can it work well for startups, but it is an option for growth and expansion projects as well. You Need Other Funding Options for When Business Crowdfunding Doesn’t Cut It However, crowdfunding isn’t a sure thing by a long shot. In fact, it is pretty … Continue reading All You Need to Know About Business Crowdfunding

Small Business Crowdfunding: Is it For You?

Small business crowdfunding is just one of many funding options. How do you know which one is best for you? Crowdfunding is an innovative way for a business to get funding. Honestly, it seems to be perfect. Except, it doesn’t work for everyone

Small Business Crowdfunding is Not for Everyone

The problem is, a huge number of crowdfunding campaigns are not successful. That doesn’t mean you won’t see success, but crowdfunding for startups really isn’t for everyone. It works much better for some types of businesses than others.

In addition, how you run your campaign makes a huge difference in your success. We have the secrets to both successful campaigns and which businesses do best with small business crowdfunding.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

What is Small Business Crowdfunding

Crowdfunding sites let you get the word out about your business to thousands of micro investors at once. Anyone interested can invest as much or as little as they want.

They can pledge a wide range of amounts depending on the campaign and the platform in use. They may give anywhere from $50 to $500. Heck, pledges can even go as low as $5.

Most offer rewards to investors for their giving. Usually, this is the product the business will be selling. However, often different levels of giving result in different rewards. For example, a $5 gift may get you a thank you note, and a $100 gift will get you an early release of the product.

What Types of Businesses Do Best with Small Business Crowdfunding?

Any business can give crowdfunding a shot, and success is always possible. However, historically these types of businesses have done best.

New Local Services

This one was surprising to me personally, but it makes sense. If you want to open a local business, especially in an area where there is a direct need, it could do well with small business crowdfunding for startups. It may depend on your platform, more on that later. For now, Local Lift is designed specifically for local businesses to request funding, gauge interest, and even build a customer base before opening.

New High-Tech Gadgets

Unique Inventions for the Home

This category gets a ton of support, especially for items that solve everyday problems. For example, the fly killing salt shotgun and the wet diaper sensor have done really well!

New Tools for Cooking at Home

Think things that will let you do something at home that you normally can’t, like carbonate your own soda, or something that lets your cook things faster, or easier. Items that serve multiple purposes are another option. Maybe an easy way to make sushi at home? New kitchen tools for the home are often a big hit.

Small Business Crowdfunding Platforms

Suppose you have one of these highly successful ideas, or even if you do not and you want to give small business crowdfunding a shot anyway, you need to find the right platform. Now more than ever, with the economic downturn due to coronavirus, you have to choose your platform carefully. Here are a few to start with.

Kickckstarter

With over 14 million backers, Kickstarter is one of the largest crowdfunding platforms in the world. They boast over 130,000 funded projects. These include products and services related to:

Publishing
The arts and film
Comics and illustration
Design and tech

Kickstarter requires you to have a prototype. In addition, projects cannot be for charity. However, nonprofits can use Kickstarter. Also, you are not allowed to offer equity in a company as a perk.

Other banned projects and perks include anything to do with:

Contests and raffles
Cures and medicines
Credit services
Live animals
Alcohol
Weapons

Creators collect a 5% fee on all funds. They also use a payment processor, Stripe, that applies payment processing fees (roughly 3-5%). Unsuccessful campaigns do not pay a fee. There are also fees of 3% + $0.20 per pledge. Pledges under $10 have to pay a discounted micro pledge fee of 5% + $0.05 per pledge.

Indiegogo

RocketHub

RocketHub is better suited for those who need venture capital. They give you an ELEQUITY Funding Room. There, you can pitch your idea and see if it stimulates any interest from donors.

This platform is specifically for business owners working on projects related to:

Art
Business
Science
Social

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

CircleUp

CircleUp can be good for those who already have a somewhat established business. That includes business owners who want both funding and guidance in order to take their businesses to the next level.

If your business gets approval for listing on CircleUp, the fee percentage comes from the total amount you raise.

GoGetFunding

Crowdfunder

With Crowdfunder, investors purchase equity in promising companies. They consider campaigns to be deals, and its donors are investors. Basic listings are $449/month. Self-start listings are $499/month. Self-start plus is $999/month. In their community, there are over 15,000 investors and 200,000 startups.

Fundable

This is a crowdfunding for business platform that allows companies to raise funds from investors, customers, and friends. They have over $80 million in funding commitments.

Fundable does allow equity campaigns. Also, they charge $179 per month to raise funds. Fees on rewards are: 3.5% + 30¢ per transaction. They do not charge success fees.

Fundly

Fundly allows for crowdfunding for creative ventures. If your business has a creative lean, this might work for you.

Keys to a Successful Small Business Crowdfunding Campaign

There is no such thing as guaranteed success. These steps can help make sure you give yourself the best chance possible when it comes to crowdfunding for business.

Do the Research

Create a Prototype

Trulty, you have to have a sample to show investors. It’s important. People are generally more likely to let go of money if they can see something tangible. This is so vital that Kickstarter actually mandates that you to have a prototype to show potential investors

Consider Your Platform

Once you know who your target audience is, you can determine if you would be best served by Kickstarter, Indiegogo, or another successful platform that is not as well known. If your audience doesn’t use the platform you are on, it won’t matter how great your idea or product is. They’ll never see it.

Give Awesome Incentives

Set a Goal

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

It’s All in the Marketing

You can’t just willy nilly throw a campaign together. If you create a video, it needs to be professionally edited. Any social media should be specifically targeted toward your audience. If they are a cheesy, audience, then that is how your social media and videos need to be. A more sophisticated audience will need a different feel.

Whether Small Business Crowdfunding Works for You or Not, You Need Strong Fundability

What is fundability? It’s the ability of your business to get funding. What affects the fundability of your business? How do you make your business fundable? Those are short questions with very long answers. Here’s a brief rundown.

How Do You Make Your Business Fundable?

Your business will never build fundability if you do not set it up to do so. These means:

Having a separate phone number, address, and email address for your business. Don’t use your own.
Incorporating as an S-corp, LLC, or corporation.
Opening a separate, dedicated business bank account.
Have all the licenses necessary to operate.
Getting an EIN from the IRS.
Getting a D-U-N-S number from Dun & Bradstreet.
Having a professional, user friendly business website.

That’s just the setup however. This doesn’t cause your business to be fundable, it just gets it ready. If everything else is stellar and your business isn’t set up this way, it will not be fundable.

What Affects the Fundability of Your Business?

This list is much more complicated. All of these things fit together like the pieces of a very strange puzzle. Some of it has to do with the past, some the future, and some deal with what is happening right now. For example, some things related to you personally, such as liens, traffic tickets, and person credit can actually affect the fundability of your business.

That said, if you flood the agencies that report this information with enough positive information, the older information will not matter as much. At the same time, you have to work to actively build business credit, which is a whole other animal. It affects fundability in a huge way, but contrary to personal credit, it doesn’t build on its own.

Is Small Business Crowdfunding for You?

It might be. If you fit into one of those categories known to be the most successful, give it a shot. Even if you don’t, there’s nothing that says you can’t try. Either way, be sure to follow our tips for a successful campaign, and work on fundability at the same time. In the future, you will most definitely need it.

The post Small Business Crowdfunding: Is it For You? appeared first on Credit Suite.

46 Crowdfunding Resources Available to Help You Run Your Campaign

Are you looking for crowdfunding resources? You’ve come to the right place. There are videos, books, articles, blogs, and even special tools to help you run the most successful campaign possible.

Of course, some of the information these resources offer will not be as useful to you as others. It all depends on your unique needs and situation. Do take the time to browse them all, even those that are written specifically for a platform you do not intend to use. You may be surprised at what you can learn and what advice can cross over.

Be aware too, that each platform has its own set of rules. Do not neglect to read the regulations and FAQs for whichever platform you choose to go forward with.

Keep your business protected with our professional business credit monitoring.

Try These 46 Crowdfunding Resources to Help You Run a Successful Campaign

Regardless of how many crowdfunding resources you find or how successful your campaign is, you will still need to build fundability for your business. Crowdfunding won’t work forever, and you need to be sure you have every funding option possible available to you. The best way to do that is to ensure your business is as fundable as possible.

In truth, fundability is much more important than building the perfect crowdfunding campaign. That doesn’t mean you should give up on crowdfunding, but you definitely can’t rely on it. It may work, but it may not. So, building fundability will ensure you have access to the funding you need throughout the life of your business.

What is Crowdfunding?

Crowdfunding sites allow you to inform thousands of micro investors about your business or business idea. Anyone who wants to can invest as much or as little as they want.

Investors pledge a broad range of amounts depending on the campaign and the platform in use. They may give $50, they may give $150, or they may give over $500. Pledges can even go as low as $5.

Though not always necessary, most offer rewards to investors for their giving. Typically, this comes in the form of the product the business will be selling. Different levels of giving result in different rewards. For example, a $50 gift may get you one incentive, and a $100 gift will get you an upgraded version of that incentive, or something different all together.

Where Do You Get Started with Crowdfunding?

There are many crowdfunding sites, but the most popular are Kickstarter and Indiegogo. Many crowdfunding resources are geared toward aiding in success on these two platforms. Much of the advice these resources offer is useful on any crowdfunding campaign, but some is specifically useful on one of these two.

The platforms are similar, but there are some very large differences. The most obvious is when you actually get the funds you raise.

For example, with Kickstarter you have to reach your preset goal before you can receive the funds. If you set a goal to raise $12,000, investments have to reach that amount before you get your hands on any of the money.

Indiegogo on the other hand lets you choose if you want to receive funds as they come in or wait until you reach your goal. In addition, they have the option for InDemand, which lets you continue to raise funds after your initial campaign is over. There is no need to start a new campaign.

Indiegogo also has a flexible funding option for those who may need it.

To make the choice for yourself, you need to figure out who your audience is, and which platform will best reach them.

The internet is full of advice and tools to help you fund a fabulous crowdfunding campaign. We’ve gathered some of them here in one place so you can get the best start possible.

Keep your business protected with our professional business credit monitoring.

Platform Specific Crowdfunding Resources

Like I said, you’ll find many crowdfunding resources are geared toward help on a specific platform. Remember though, don’t underestimate a resource that is not geared toward your platform. Certain aspects can be helpful regardless of the platform you use.

Kickstarter

Here are some great crowdfunding resources to help with success on Kickstarter.

Indiegogo

Here are some crowdfunding resources geared toward Indiegogo users.

Other Specific

These crowdfunding resources are geared toward specific platforms other than Kickstarter and Indiegogo.

Non-Platform Specific Crowdfunding Resources

These resources are not directed toward success on any specific crowdfunding platform. Rather they can offer inspiration and direction on techniques and circumstances that should work regardless of the platform you choose.

Videos

These video crowdfunding resources may be useful.

Other Crowdfunding Resources

The following crowdfunding resources do not really fit into another category so we are calling them miscellaneous.

Don’t Put all your Eggs in the Crowdfunding Basket

Crowdfunding is a great option, but the cold hard fact is that it rarely works. There are far more campaigns that fail than see success. Even those that are successful often end up not raising enough funds. Then, entrepreneurs end up needing to seek out funds from other sources.

These other sources may include loans, invoice financing, and lines of credit. Of course, grants are an option too. However, they are few and far between. Furthermore, competition for grants is fierce. That leaves the financing options, and to be eligible for those, your business has to be fundable.

Fundability if the ability of your business to get funding. It is affected by many things. Business credit is a huge piece, as is personal credit. However, it is impossible to have fundability regardless of your credit, if your business is not properly set up to be fundable.

Keep your business protected with our professional business credit monitoring.

How to Set Up Your Business to Be Fundable

LIke I said, setting up your business to be fundable is not the only piece of the fundability puzzle. However, it is the first piece that has to be placed and the biggest piece missed by most business owners. Here is where you start.

Contact Information

The first step in setting up a business to be fundable is to ensure it has its own phone number, fax number, and address. You can still run your business from your home or on your computer if that is what you want.

In fact, you can get a business phone number and fax number that will function over the internet rather than phone lines. Also, the phone number will forward to any phone you want it to so you can simply use your personal cell phone or landline if you want.

In addition, you can use a virtual office for a business address. This is a business that offers a physical address for a fee. Sometimes they even offer mail service and live receptionist services. Even better, there are some that offer meeting spaces for those times you may need to meet a client or customer in person.

EIN

The next thing you need to do is get an EIN for your business. This is an identifying number for your business that works in a way similar to how your SSN works for you personally. You can get one for free from the IRS.

Incorporate

Incorporating your business as an LLC, S-corp, or corporation is necessary to fundability. This helps show your business is legitimate, and it gives some protection from liability.

It does not matter which option you choose when it comes to fundability. It does matter for your budget and needs for liability protection. The best bet is to talk to your attorney or a tax professional. Keep in mind, when you incorporate, you become a new entity. Basically, you have to start over. You’ll also lose any positive payment history you may have accumulated.

As a result, you have to incorporate as soon as possible. Time in business is important to fundability as well. The longer you have been in business the more fundable you appear to be. That starts on the date of incorporation, regardless of when you actually started doing business.

Business Bank Account

You need a separate, dedicated business bank account. Here’s why. First, it will help you keep business finances separate from personal ones. This is important for tax purposes.

But wait, there’s more. You can’t get some types of funding without a business bank account. Many lenders and credit cards want to see a minimum average balance. In addition, you cannot get a merchant account without a business account at a bank. That means you can’t take credit card payments. Generally, consumers spend more when they can pay by credit card.

Licenses

For a business to be legitimate, it has to have all of the licenses it needs to run. Conversely, if it doesn’t, it will not appear to be a legitimate business. Do the research you need to do to make sure you have all of the licenses you need to legitimately run your business at the federal, state, and local levels.

Website

How can a business website affect your ability to get funding? In today’s world, you do not exist if you do not have a website. However, a poorly put together website can be even worse. It is the first impression you make on most. If it appears to be unprofessional, it will not look good for you with consumers or potential lenders.

Even more to the point, if potential investors from a crowdfunding site check out your website and it stinks, they will not donate.

Do what you have to to make sure your website is professionally designed and works well. Also, don’t use a free hosting service. Don’t forget, your business needs a dedicated business email address. Make sure it has the same URL as your Website. Don’t use a free service such as Yahoo or Gmail.

Get all Your Proverbial Ducks in a Row

What’s the take away? First, crowdfunding is a legitimate option, and these 46 crowdfunding resources can help you on your road to success. Next, you have to have a backup plan. You have to know you can get funding if crowdfunding doesn’t work out. Fundability is your backup plan. There are a lot of things that affect fundability, but none of it matters if your business isn’t set up to be fundable in the first place. There are several things you have to do to set up your business to build fundability.

If your business is fundable, you will be able to access pretty much any funding you need now and into the future. You won’t have to worry about the ability to qualify for a loan, line of credit, or any other type of financing. This will help ensure your business can run and grow for as long as you want.

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