Figuring out how to fund your business is difficult. Besides scrimping and saving, borrowing from friends and family, and the nearly impossible act of trying to get a loan, one thing we hear a lot about is crowd funding.
Now, we’re not here to tell you that this is something you should or shouldn’t do, but simply to clarify what crowd funding is, share an example, and list some pros and cons.
So, what is crowd funding?
Crowd funding, as described by Wikipedia describes the collective effort of individuals who network and pool their money, usually via the internet, to support efforts initiated by other people or organizations.
So basically, someone decides to create something, sets a financial goal, joins a platform like Kickstarter,Indiegogo, or Rock the Post, tells their story, and hopefully elicits funding through offerings or rewards to members of the general public who may believe in them or want to support their brand, mission, or product.
In browsing these various platforms, you’ll come across all kinds of brands and products, including several in the fashion realm. One such campaign that’s in it’s final stretch is Sabi Collection, a very cool hand made jewelry brand. For Jill McKeown, the founder of Sabi Collection, the goal is not to fund the brand exactly but to get help funding the brand’s participation in an influential industry trade show that she feels can really help elevate her brand.
If you create a crowd funding campaign, it’s important to be clear about what the pledges are supporting. It’s also important to tell your story, post updates on the project, share a lot of images, and really leverage that video you get to post; allow potential supporters to feel like they’re getting to know you, your brand, and your mission.
Pros of Crowd Funding
- Helps limit the financial risk of starting a business, creating a project, or taking up an initiative
- Can really give a boost to your marketing efforts
- Feedback! Crowd funding nurtures crowd sourcing about a product, service, or idea
- There is an opportunity to presell and create a following for your business or project before it even launches
While this may sound like the answer to all your prayers, it’s important to keep in mind the…
Cons of Crowd Funding
- Over promising and under delivering; some find it a challenge to meet deadlines and produce the project as stated in the campaign, which can be off putting to those who pledged
- If proper thought is not put into the campaign, you can possibly not make as much money as you actually need for your business. Remember to factor in things like the cost to produce the rewards given to those who pledge
- Half-assed campaign. Remember what we said about the importance of telling your story? It needs to be great, passionate, exciting. Because, remember you’re not the only project or business out there and those that convey their message in a way that creates an emotional connection, are the ones that will get attention. And money.
Crowd funding is not for everybody, but it’s definitely worth looking into for brands that have the right brand story.