5 things to consider BEFORE crowdfunding
I have many conversations about crowdfunding on a regular basis. Half of what I do is educate companies on what it takes to crowdfund. While many campaigns like Axent, 3Doodler and Oculus Rift, make it look like crowdfunding is some magic that will get you a million dollars, it is actually much more detailed and planned than that.
What I can tell you that there is a recipe for a good attempt at what some of the larger campaigns achieve. Here are five things that you should definitely consider before taking a leap into crowdfunding.
- It costs money to make money – Nothing good ever came to anyone for free. This old adage stays true even in crowdfunding. Yes, you are trying to raise funds, but the higher your expectations are the more you need to consider investing into your campaign. The actual dollar amount may vary, this also may be an investment of time and resources. The idea that your campaign will go viral just because you launched on Kickstarter or Indiegogo, without monetary support is misleading. The campaigns that you see that are reaching hundreds of thousands or millions of dollars are definitely investing in their campaign in other ways. For example, one campaign that we ran that raised about $700K, invested about $65K in the campaign development including PR, social advertising, video, graphics and more. The marketing for a solid crowdfunding campaign happens far earlier than the actual campaign launch. That includes pre-marketing, social media outreach, email collection and PR.
- Crowdfunding does not sleep – Once you launch your campaign, an average campaign will last about 30 days. During this 30 days, you’ll go through an emotional rollercoaster, constantly refreshing and checking your campaign to see if it’s “viral” yet. Because crowdfunding is so fast-paced, you have to be ready to really invest a full month on trying new ideas, monitoring and updating your campaign. Not only that, people will have questions. Engaging your crowdfunding community is highly important during your campaign. Make sure you factor in that someone on your “team” should be ready to engage in the campaign as much as possible, especially if you want to be successful.
- Taxes, fees, shipping – Every once in awhile I run into folks that forget that running a crowdfunding campaign is actually form of income. When pricing your rewards for the campaign, you should keep in mind a few key things. You will need to pay taxes on the income at some point, there are platform fees for both Kickstarter and Indiegogo (5% of your raise) and price out your shipping based on the weight of your product and locations. I’ve seen some people overlook shipping costs and not realize how much they will actually cost. Lastly, gaging a delivery date that is reasonable is important too. That doesn’t have to do directly with cost, but it will affect your campaign decisions greatly and can make/break your community engagement.
- Have something interesting, unique, compelling and different – Just launching a campaign doesn’t make it a winner. Make sure you’re offering something someone wants to get. Make sure you have a target audience that will spend what you are asking, for what you are offering. I know this sounds like a no brainer, but just because another similar product did well, doesn’t mean that your campaign will be a winner. Product, layout and preparation are all integral parts of a successful campaign.
- Don’t crowdfund if it’s your last option – Crowdfunding is not a save all. If anything, you should consider it an experiment. I’ve heard one too many times that companies think that crowdfunding will save them. If that’s the position you’re in, I’d tell you right now to “forgetta bout it”. If you’re putting everything on the line here, just know that you’re going to have the worse month of your life. For most crowdfunding is an exhausting experience. Add that to putting the future of your business on the line, unparalleled levels of anxiety will ensue.
Just remember anything worth something takes effort, ingenuity and some real support. Crowdfunding campaigns are very intense projects and sometimes seem too good to be true, which means that there is probably a machine (not just one person) behind the project. Make sure you plan ahead for the time, money and resources that it takes to execute a successful crowdfunding campaign.
Not sure what you’ll need? Contact us and we’ll send you a crowdfunding checklist of things you’ll need to have before you launch your campaign.