As new businesses sprout up, crowdsourcing has become a popular way to get the financing to back projects. This recently popular finance option has taken the concept of many hands make light work and implements the concept with financing a new business. Instead of the traditional financing from banks, or finding an angel investor or capitalist to buy into a business concept, crowdfunding uses a “crowd” of people to fund the business. Each person dedicates a small amount of capital to a new company, thus providing the necessary capital for the new business without the risk associated with a large investment.
Finding the funding for your business is possible, but you must know what to do. Follow these simple steps to maximize your chances of getting the money you need.
SELL YOUR IDEA
You must be passionate about your service or product. This will come across to your potential investors, and they will capture a bit of your excitement. You will also want to demonstrate how your idea is a new, exciting and rare product that hasn’t already been designed. Show how it is helpful to the end user, and explain why it matters to you and the public. An investor is much more willing to supplement crowdfunding for a business owner that is passionate about the product.
Make sure to spend time working on pitching your idea. A great way is to ask friends and family to let you practice your speech with them. Have a strong elevator pitch at the beginning of your sale. Make sure that you explain the need for the product, the impact it will have, your experience with the industry, and a summary that eases potential fears.
HAVE A SPECIFIC CROWDSOURCING BUDGET
Do your research to find out how much money you need your crowdfunders to finance. Having a projected budget that includes labor, materials and marketing for a designated amount of time will make investors more likely to share their money. A business plan that you have been working on without the assistance of a crowdfunding budget with established legwork will demonstrate that you are serious about your business idea. Doing the background work reassures investors that you aren’t merely seeking a charity handout.
RESEARCH CROWDSOURCING SERVICES
More and more sites are popping up that match investors with new businesses. When selecting which services you want to use, there are several options. Find out if your resource is country specific (there are certain companies that help within their continent). Make sure you know the limitations and restrictions of your crowdsourcing. Do you have time limits to raise the money, or a minimum amount? Does the service finance industry specific businesses, or is it open ended? There are some very industry specific sites.
Once you have the basics of your business ready, then start seeking crowdsourcing as one of your avenues of finance options. The more time and energy you invest in creating a sellable product to investors, the more likely you are to get financed for your new business venture.
Make it lucrative to invest in your business with an offer of a return on investment, you are more likely to find the investors you want.