People who have entrepreneurship in their genes normally succeed in setting up a business one way or the other. It is a different story whether the business succeeds or not because the nature of businesses varies and the time it takes to break even differs from one type of business to another.
Apart from it being considered a risky, unsteady step, the fact that you need quite a lump sum to start the business of your dreams is what stops one too many wannabe entrepreneurs from setting up shop. Not all of us are trust-fund babies nor do we have seven-figure salaries, duh! True that venture capitalists and angel investors can be found aplenty in today’s business scenario to secure funding from. But is there another way out, without giving up one’s authority and sovereignty? There appears to be one and it is called crowdfunding. It is the process of raising funds—mainly through the internet—from a large number of people who are convinced of your business idea.
Here are five super-convincing reasons why crowdfunding is a great way to get the funding you need.
1.It is an easier alternative: If you weren’t born with a silver spoon, chances are that you probably had to work hard to get where you are today. When you hear inspirational rags-to-riches stories, little do they tell you that there’s only a one in a million chance that that may happen to you. And business loans? Don’t get us started on that. Applying for one, and hoping it will go through all the interminable red tape procedures, is sometimes as dispiriting as going after the rainbow and finding no pot of gold when you do actually find its end! Crowdfunding offers an alternative method to get funding for your business and we believe its worth the shot.
2. Get noticed a.k.a. free publicity: If your business idea is, in fact, unique and useful, imagine all the support you are going to get on a crowdfunding platform! Early adopters are going to love your idea and that is exactly how you build a loyal band of followers. Additionally, crowdfunding sites such as Indiegogo and Kickstarter get hundreds of thousands of unique visitors per month, skyrocketing the chances of your project getting more publicity, and in turn, more backers.
3. Get validation: Although self-doubt is critical to one’s success, it can be frustrating when you start doubting the merit and practicality of your product or service. Crowdfunding helps you dispel all notions of doubt because you will be able to gauge whether your target market is going to love your product or hate it. In other words, you get your share of market research done on the same platform you introduce your product idea for the world to back! People who are genuinely interested in your idea will also share their insights and feedback and help you fine-tune your business/product idea.
4. Low risk: Most crowdfunding sites get backers by allowing them to pre-order the product/service at a heavily discounted rate. This takes care of the initial funding you need, and also makes it possible for you to place large orders with manufacturers, which will effectively bring the production costs down—quite a difficult task to otherwise achieve in the early days of any business! This lowers your risk of placing massive orders in the beginning and later, being left with dead stock that you may have to struggle to get rid of.
5.Ease of setting up: If you have tried applying for a loan, you probably know about all the hoops one must jump through to get what you want. Thanks to crowdfunding platforms, the process of securing funds has been made unbelievably easy. If you have a prototype and a business plan capable of wooing backers, you are on your way to starting your own business soon!
If your crowdfunding campaign does indeed happen to be a success, it is safe to assume that your new business would also be getting a lot of limelight. It is, after all, a success story and everybody is going to want a piece of that.