20 Hard Questions to ask before CrowdFunding your Startup.
Value, Unique, Motivate, Tangible, Target, Costing, Flexibility, Fulfillment, Rewards, Demands, Marketing, Risk in CF
CrowdFunding seems like the best alternative to the VC & Angel investment community. Instead of creating complex business plans and pitches and hoping influential groups of wealthy investors will decide your business or startup aligns with their vision of public taste, you can instead go direct to the end-user in Crowd-Funding (CF) with a compelling video plea.
Top CrowdFunding sites like Kickstarter, IndieGogo, RocketHub, Peerbackers & dozens of emerging rival platforms, offer aggressive entrepreneurs opportunities using prototypes, attention-getting film clips, & a little of their unique personality to gather public support. Courting everyday Internet users for financial backing, in exchange for merchandise, pre-orders or more personal awards (e.g. appearances in their next film or TV show). The best part is that business owners typically don’t give up any equity or ownership stake in the venture.
CrowdFunding (CF) isn’t for all businesses non-profits or industries. From planning to Projection & execution, there are several factors to consider if you are thinking about using a Crowd-Funding model to finance a Business, Project, Non-Profit, Service or event. Following are several qualifying questions to ask yourself, before turning to CrowdFunding (CF) as a source of startup capital – think long and hard on all these questions below, before taking the plunge.
- How “good” is your Idea? Are you certain that people will be interested in it? Have you explained to family, friends & a few potential customers?
- What “value” does your Project offer a customer? Does it offer a significant solution to a problem that they would be willing to pay for.
- What “unique” about your Project from existing competitors, or alternative solutions that are already existing? Is it better, faster, cheaper? Are you utilizing the advantage of using an existing brand, or personality that has a pre-existing base of fans or consumers?
- Can you express your Idea “simply” and at the same time motivate people to get “excited” about it? If not, it may be that the idea/project isn’t all that compelling, or that you may not be the right person or presentation to communicate the benefits – that are an advantage to the customer/client.
- Do you have something “tangible” to Show & Tell, when presenting your project – like some visual aspect of your project (photos, graphs, etc) that can help other people visualize or understand it? (ie, a demo of a prototype)
- How well do you know & understand your Target Audience? Have you done your research to determine to find out who they are and what they’re like? + their needs?
- Do you have “confidence” in your ability to reach out & connect with your potential backers in CF? Have you planned Strategic Marketing Plan – which you will use to reach out & connect with them? Have you had a Marketing Expert review your plans?
- Have you “figured” how much $$$ you will need? + extra to cover contingencies, in order to launch the Project?
- Have you factored in all Financial Variables? including the costs of reward fulfillment, payments to the CrowdFunding service, taxes, etc?
- Have you created a Budget that allows “flexibility” in certain areas? + factors in conservative revenue projections – for plenty of safety margin?
- Are you positive that you can “fulfill” all your committments? a) completing the project in the allotted timeframe, b) delivering on all benefits & content covered in your pitch? Have you considered the impact on your Project’s brand identity, or your own personal reputation – if your campaign does not succeed?
- What Rewards have you considered to give Backers & Fans incentive to donate to your CF project? Have you planned out your reward tiers? How will you offer these rewards, & what $$$ amount will you attach to them?
- Can you offer “meaningful” Rewards at a variety of investment levels to attract potential patrons from very small to big and all those in between?
- What specific or unique Rewards will you use to get people talking about your project? Can you create a Slogan or Mission statement that can be used in Social Media campaigns or for Press Releases – that will inspire people?
- Do you understand all the personal & professional “demands” that the process of running a Crowd-Funding campaign demands from founders? Are you prepared to put >100% effort – time & energy – into making your Crowd-Funding (CF) Project a success and accepting the stress?
- Do you have at least some Marketing, PR & Social Media connections & savvy to review your Marketing Plan? If you don’t have immediate connections, talk to your network to find one thru them.
- What Promotional Campaign activities do you plan to pursue leading up to & during launch? How will you keep the buzz going after your CF project debuts? Again have your Marketing Advisor review this.
- Are you ready & able to take a big personal Risk? Losing your Paycheck? Do you have the $$$ (ie, IRA) How soon will you get Sufficient Cash Flow? Are willing to sacrifice a lot of “time & energy” to help it succeed?
- Do you fully “believe” in your Project? Have you convinced at least a few other people you can count on for support, whether financial, emotional (ie, significant other) or otherwise? Who can you turn to for help, whether in terms of assistance with asset creation, financial backing, raising awareness or just help spreading the word? [Mentors, Advisors, Businessess & Investors + Family, Friends & Fools [LoL]?
- Have you examined other Crowd-Funding projects? – both successes & failures – to understand which approaches, techniques & strategies work or tend to result in failure?
Conclusion: If you can satisfactorily answer all of these above questions and believe with “certainty” in your ability to deliver on all your promises, there’s a good chance that you can be successful with crowd funded ventures.
Comments: What else do you think is necessary to be ready for Crowd-Funding?
from Peter/CXO Wiz4biz 24 June 16