Crowdfunding can help entrepreneurs get the cash they need to build a successful business opportunity. The only problem is that many entrepreneurs try to skip certain steps in the process because they want that cash right away. There are no shortcuts in the entrepreneurial world. You need to have these 10 things in place before you even consider the creation of a crowdfunding campaign.
1. A Real Business Plan.
You can’t generally create a successful business unless there is a plan behind that business. The ideas in your head don’t count. You need to outline your goals, what you must do to achieve those goals, and why it has the chance to make money. This plan is what you will always come back to whenever you have a question about your business.
2. Research Of Your Targeted Market.
Backers won’t support an idea that isn’t wanted by the marketplace. You must have data that supports the need for your idea. This evidence will give you proof that your idea has value later on.
3. Create a Financial Model.
How you plan to spend money tells people a lot about who you are as an entrepreneur. A general overview might be sufficient for a business plan, but backers are going to want some very specific details. Put together your projected costs, sales and revenue forecasts, anticipated profit margins, and other key facts that will show your idea can make money instead of being a money bit.
4. It’s Not Just The 5 Year Plan.
A 5 year plan is necessary for entrepreneurs to prove they have considered long-term development. You’ll also want to develop a 1 year and 3 year plan as well. These are the key points of growth for an initial business and you need to have solutions in place that will show backers you’ve got some staying power. A 10 year plan might be a good idea for some entrepreneurs as well.
5. Let Your Customers Do The Talking.
If you’ve already generated some sales, then let your customers talk about the pros and cons of your product. Get testimonials that can be used as evidence of your value proposition. This is especially beneficial if you have a high profile customer that backers might know and respect already.
6. Prove That You’re Capable Of Running The Business.
The first stages of development during the startup process are the most critical. You’ve got to show backers that you’re going to supervise this growth personally. Having the education and experience to do this is often enough evidence, but if you don’t as an entrepreneur, you’ll need to find outside resources that backers trust to make sure you can achieve the goals that have been outlined in your business plan.
7. Make Sure You’ve Got Something Personal At Stake.
If you’re not willing to invest into your innovative idea, then why should anyone else? Backers like to see entrepreneurs who are willing to bet on themselves. Put your savings, liquid cash, and any help you can get from family or friends to get some initial financial backing when you’re ready to start the building process.
8. Establish Your Brand Identity.
This is what backers are going to think about when they picture the information your business is presenting. Many brands are developed during the marketing phase of the business startup process and it needs to be a strong message. It represents your value proposition. A brand should provide an entrepreneur with character and communicate the viability of the idea.
9. Set Realistic Goals.
Going into the crowdfunding process with budgetary blinders on is the most common mistake entrepreneurs make. You need to have a budget completed for your startup before any crowdfunding campaign comes to life. This will allow you to know how much money you’ll need to ask backers to provide when the time comes to go live. Backers want specifics. If you can itemize your costs, you’ll let backers know where their money is going so they can plan their own exit more efficiently.
10. Provide a Reward.
Having sample products, interactive rewards, and other benefits is an easy way to spark some interest in a rewards-based crowdfunding campaign. For equity crowdfunding, you’ll need to provide backers with a projected payout after a specific period of time.
Do you need to have everything completed on this list before crowdfunding? Not necessarily, but each of these completed tasks will make the actual crowdfunding work easier to do. Your preparation will help the ideas you have to shine through and that will let backers see that they can benefit from backing your campaign.
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