Resources are always tight when you’re first starting a business. Everything costs money and you only have so much in your budget. So you have to prioritize – you pay your employees, the rent on your offices, and the utilities you need to be operational. By then, you don’t have enough left to invest in quality marketing services. And yet, investing in marketing is the only way you’ll grow your business. But what if there is a way to both pad your budget and promote your business at once? Business advertising through crowdfunding might be worth a try!
What is crowdfunding?
Crowdfunding is a way to raise money for a particular cause online. Instead of one person or business needing to front the entire sum, many people give a little bit each until the goal is met. Small businesses have been known to use this tactic to get themselves off the ground – prospective owners collect money for the initial investment, office space rent, supplies and utilities, marketing costs, and more.
How does business advertising through crowdfunding work?
There are two ways in which advertising and crowdfunding go together: crowdfunding can finance advertising and crowdfunding can itself be a form of advertising. The former is pretty self-explanatory; a business can set up a crowdfunding campaign to collect enough funds to run its marketing campaign. When it comes to the latter, it’s important to remember that there are many ways to advertise online and paid ads are far from the only options. Virtually anything that spreads the word about a business in a planned and systematic way can be considered a form of marketing. Since it’s more than possible that people will hear about your business through your crowdfunding efforts, crowdfunding fulfills one of the main goals of marketing.
The benefits of business advertising through crowdfunding
There are thousands of crowdfunding campaigns online at any given time. Just setting one up is no guarantee of success. So is it worth the effort you’ll need to put in? Well, that depends on how successful you are. But here are some benefits that you can look forward to:
An easy and convenient way to finance your business
Starting a business can be very expensive. You should get as much financial support as you can in any way you can. Crowdfunding is one option you should definitely consider. Even if you don’t meet your goal, you’ll at least be able to ease the financial burden of owning a business. Since starting an account and setting up a campaign is free on most crowdfunding websites, you don’t even have anything to lose!
A good way to do market research and find out how much your idea is worth
Most people are not able to support every cause they come across on crowdfunding websites even if they only donate a little to each one. Instead, they pick and choose the causes they like best. A crowdfunding campaign can, therefore, be a good test of whether you are able to convince people that you have a winning idea. If many people are willing to give money to see you get off the ground, that’s a good sign; if some people are donating a lot of money, that also means they believe in you. On the other hand, if your crowdfunding campaign fails, that may be a sign that you need to rethink something about your business.
A marketing tool where you didn’t expect it
Although not the most effective marketing tactic, crowdfunding is nonetheless a useful tool for advertising your business when you’re short on funds. You can spread the word about your business before you’ve even started it, collect contact information from campaign supporters, turn campaign supporters into moving leads, and even rely on promotion services provided by the crowdfunding platform itself. This will, of course, depend on the platform. But most will promote select campaigns and even offer some marketing services for free.
How to make business advertising through crowdfunding worth the effort
The best way to advertise your business using crowdfunding is to make sure you run a successful campaign. So here are some tips to up your chances of reaching your goals:
Launch your website before starting a campaign
Every business needs a website; moving company marketing, whether through crowdfunding or other methods, won’t work if you don’t have somewhere to direct your supporters when they want to get informed, support you, or just keep track of your development. So it’s best to set up a website before you start your crowdfunding efforts. It doesn’t have to be the website that you use in the future. Just a simple, temporary solution will also work. All you need to do is make sure that you’re providing relevant information about your efforts. Not only does this give you the opportunity to present your business to the world, but it also adds to your legitimacy.
Do a bit of market research, to begin with
If you’re crowdfunding a business, odds are that you don’t have a lot to invest in market research. But you do need to know who your target audience is before you can set up a crowdfunding campaign they’ll respond to. So use your imagination and some free SEO tools instead.
- Start by asking yourself who your ideal customer is.
- Next, use the data you collect from your website to see who your visitors are. Then use Google to research businesses similar to yours. Find out who their customers are too and how they market themselves.
- Finally, look into the local business landscape to see if you can learn from other businesses in the area. This will help you determine who your target demographic is. You can then use this information to tailor your crowdfunding to their interests.
Choose the right crowdfunding platform
Different crowdfunding platforms operate in different ways. Some charge transaction fees, some take a percentage of successful campaigns, some deliver payment once the product is delivered. So what works for you will depend on how much money you’re raising, how, and at which point in the development of your business. For businesses, the most popular platforms are Kickstarter, Indiegogo, and GoFundMe. Both Kickstarter and Indiegogo charge 5% for a successful campaign plus transactional fees. At GoFundMe, you’ll only pay transactional fees. However, this makes GoFundMe popular among private individuals as well so you might have a harder time attracting supporters.
Promote your crowdfunding efforts on social media
Business advertising through crowdfunding is not possible if no one knows you’re crowdfunding in the first place. So you need to get the word out there. The best way to do so for free is by using your social media to post about your efforts. Even if people don’t donate to your campaign, they’ll learn about your business and that’s a good first step. If you’re lucky, you could even go viral. This would all but ensure a successful start to your business!
