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.
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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.
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