Have you been contemplating starting a business? Have you had a million-dollar idea mulling around in your head for years but haven’t taken the next step to actually bring it to life?
As the digital age becomes more advanced, barriers to enter the marketplace are lowering. While raising capital used to be one of the most difficult steps in starting a business, the digital age makes it easier to connect with a number of microinvestors through crowdfunding sites like Kickstarter and Indiegogo. Though these sites are primarily used to collect donations, they also provide a platform to present your business ideas and gain the necessary attention to make your dreams a reality.
Ready to take the next step with your million-dollar idea? These tips will help to ensure a winning kickstarter campaign.
Know Your Goals
So, you want to raise money? Great! For what?
Like everything in life, it’s good to know where you are heading before you embark on a new journey. Thus, goal setting is critical when you are setting out to raise capital for your new venture. Goals will help to keep you accountable and guide you in creating a budget for the money that you raise. When money starts rolling in, it’s easy to get distracted, but by having structured goals that are aligned to a budget, you make it easier to allocate your funds responsibly.
Share Your Story
People donate to other people. Because of this, it is important to share the human story behind your venture. Let your potential donors know what you’re planning on doing with the capital you raise and how your idea or cause will benefit them.
The Kickstarter Creator’s Handbook offers some guidelines to share your story in the form for basic questions to answer. These include:
- Who are you?
- What are you planning to make?
- Where did this idea come from?
- What is your project timeline and schedule?
- What is your budget?
- Why are you passionate about this cause/project?
However, simply answering these questions doesn’t always result in the most compelling story. Supplement the text of your story with videos and photos to really evoke emotional ties with your visitors. Most importantly, be as creative as you want when you are telling your story. Make it you, make it authentic, make it valuable, and make it irresistible to potential donors.
Set a Manageable Funding Goal
When using Kickstarter, it is important to set a realistic goal, and even more important to note, you can’t change your goals after you enter them.
Although Kickstarter allows you to raise money, its use comes with a caveat. If you reach or exceed your fundraising goal, you keep all of the money you raise, but if not, you will not receive any of the money you’ve raised. This differs from sites like Indiegogo, which allow you to keep whatever money you raise.
Since launching in 2009, Kickstarter has only successfully launched 36.6% of the projects created. Out of more than 360,000 projects created, it has only funded 128,000, worth a total of over $3 billion.
So before jumping into Kickstarter, take time to consider the following:
How much money do you really need?
Creating a business plan will help you to have an idea of projected cost.
How long will the funding page be up?
Time is critical in the success of your campaign. A Kickstarter campaign can last from 30 to 60 days. Even so, 60 days may be too long, while 30 days may be insufficient, depending on your fundraising goal.
How many people do you know who would be willing to fund your project?
Even though your funding page is presented to the world, and has a chance to go viral, ultimately, most of your funds will come from your existing network.
Offer Amazing Rewards in Exchange
You donors took a chance on your project, so thank them. By creating rewards for your backers, you are not only treating them well, but also you are building stronger relationships with donors for future ventures or capital needs.
These rewards are usually one-off prizes or exclusive experiences that grow in value for larger pledges. Just like anything in your project, think about your rewards before launching your project. Keep in mind the average pledge is $25, so make sure to have a good incentive for that price point, and try to tie the rewards to your project to keep you backers invested in your mission.
Promote Your Campaign
In order to raise money, people need to know about your campaign. That sounds rather elementary, but far too often, campaigns that don’t reach their goals didn’t have a promotional strategy in place.
There are many ways to get the word out about your campaign, including social media and bloggers, reaching out to local media, or hosting an event to better inform donors of your mission. Just like other marketing activities, your campaign won’t be successful if you don’t put any effort into making it so.
Update Your Backers Throughout the Project
If backers cared enough about your project to donate, they probably want to be updated as the project moves forward. Keep them in the loop every step of the way, and share both the highs and the lows. Be honest. If there are snags, share how you plan to overcome them. Of course, take some time to also rejoice in your triumphs!
Your donors want to see that you are dedicated to the mission. They want to see progress and be reassured that your project was worth their investment. Additionally, if they are continuously impressed by the work you are doing (both triumphs and challenges), they are more likely to recommend your project to their friends, thus sending more capital your way.
Several businesses get off the ground thanks to Kickstarter and other crowdfunding sites. Unfortunately, there’s a large amount of projects that fail because project managers failed to prepare adequately. It is easy to get excited about your mission and have a desire to launch your campaign as quickly as possible. When you start to get ahead of yourself, step back with a critical eye and make sure that you have thought out and prepared for every step along the way.
After all—the more you prepare, the more likely you are to succeed.