Crowdfunding advice – top 8 tips for small businesses
The crowd has spoken, and it is eager to
Start-ups and SMEs have been incredibly vocal
over the past few years about the difficulty of getting their hands
on funding. From seed capital to growth capital, getting money from
financial institutions has been a struggle for many.
According to the Bank of England, lending to
SMEs in the three months leading up to November last year shrunk by
a whopping £4bn.
Enter stage left, crowdfunding.
This phenomenon has been gathering pace in
Britain for some time now. It is estimated that £120m was dealt out
to businesses through crowdfunding in 2011 – and that number is
expected to double when the results are out for 2012.
So if you’re a start-up looking to get off the
ground, your entrepreneurial juices bubbling over as you strive for
that initial capital or the fund to take you to the next stage,
then appealing to the crowd could be just for you.
Here are our top 10 tips for wooing your
would-be crowdfunding investors.
1. Pick the right site
There are numerous crowdfunding sites active in
the UK at the moment. Many have an overlap, but you might well find
that some suit your cause better than others. Whether you’re a
creative company, a social company, finance-based, there will be a
site that suits your needs best.
2. Know your target audience
Who do you think will be interested in your
product? It can be a massive help to your cause if you can aim your
business at a specific niche – especially a passionate one. You
could look at geographical targeting, sector targeting, different
3. Prepare yourself
You should be prepared to receive a barrage of
questioning and get ready to send out many emails. It might save
you time to put together a FAQs sheet or even have email templates
which you can replicate for each enquiry.
4. Get support first
It will be a much easier sell for you if you
can show that you already have support for your business. You could
do this by drumming up backing from friends and family to make it
look like you are already a success in getting investment.
5. Work out how you will spend the money
You should have a detailed plan of exactly what
you are planning to do with the extra capital. People don’t want to
just throw their money at you without proof that you have a
strategy for how their money will best go to use.
6. Be passionate
Hopefully you will be resonating with a crowd
that is already passionate about you type of business, product or
service and mirroring that will help you to convince them of your
dedication. Use images, video and text to get your message across.
You should tell your own story as well as that of the business you
are pitching. People want to believe in the person behind the
business as much as the product.
7. Utilise social media
Not everyone that you are targeting will
conveniently stumble their way across to your crowdfunding site if
choice. You need to get on all of you social networks and draw
people into your campaign. Encourage people to share it with other
like-minded people. Cast the net as far as you can.
8. Offer rewards
What will your investors get in return of their
gamble – as well as, well, returns? You should offer them more.
Discounts, special deal and some credit! Will their names be in the
credits of your film? On a plaque on the wall of your office above
the pool table? This gives people a real sense of value in putting
their cash on the line.
By Gabriella Griffiths of Prelude
via Small business advice from Smarta http://www.smarta.com/advice/business-finance/start-up-finance/crowdfunding-advice-top-8-tips-for-small-businesses