8 Things to Keep in Mind When Crowdfunding Your Future Business
Some entrepreneurs are more experienced than others. There are those who already dipped their toes in one or more crowdfunding campaigns, those who may know people who did and get advice from them and then there are those to whom it may be a completely new ball game. Regardless of how familiar you are with the entire crowdfunding process, it is always good to go over a few potential risks that could complicate things for you and get in the way of your success. These are 8 things to keep in mind when crowdfunding your future business endeavors and to help you crowdfund successfully.
1. Think about the costs. All Costs Involved.
This may seem like a very basic, straightforward thing to say, however, you would not be the first to forget including for instance the costs involved with shipping rewards to your backers. Shipping costs are often overlooked or underestimated.
It is not just the cost of the courier getting your product from A to B. Also think about packaging costs, duties and taxes, storage costs, pick & pack and more. With other words, order fulfillment fees.
It is essential that you are prepared for any costs you may have and make sure it is covered in your budget.
2. Trust issues and credibility
Likely the biggest problem with crowdfunding is trust. Your backers’ trust in you and in your campaign. You’ve probably been there yourself. You saw a project that seemed interesting and were considering investing some of your hard earned money in it. However, the thought did cross your mind that perhaps you would never receive what you paid for. “Should I put my money in this project or not.. Will they keep their promise and send me what I paid for?”.
When you are a brand with no prior record, you have to find ways to generate enough brand credibility with your backers. Without trust, you may not be able to attract enough backers and will fail to meet your targets.
There are of course exceptions, such as the 2014 campaign ran by Healbe GoBe that was said to have had many flaws. They claimed to be based in San Francisco while they were actually operating out of Russia, as well as having questionable methods of measuring the calories in their product. Despite these concerns, they still secured over $1 million in contributions.
Another way to create trust is by showcasing your Floship Certified Logistics Plan badge on your Kickstarter or Indiegogo campaign profile page. Our FCLP-certifications shows your potential backers that you got your logistics part sorted out and they can trust you to deliver upon your promise. For more information, click here to read more about the FCLP.
3. Offering way too complicated rewards
When you are creating a reward, consider exactly what you want to give but don’t make it too complicated. You may think that you want to offer some level of flexibility in the rewards you want to offer to those who supported your business, but this only increases your costs and the time it takes to create the products, and to pick & pack the orders.
For instance, do not offering clothing that has three or more different designs to choose from, each with a variety of colors. That would be at least 12 different options for the backer of your crowdfunding campaign.
Offering less complicated backer rewards has several benefits:
- It makes it easier for the backer to choose their reward.
- Less backer management is needed to record all individual choices.
- The whole production process would be simpler, with a quicker turnaround and happier backers.
Stick to one or two designs with a few colors instead. Make the descriptions clear, concise and as short as possible so contributors know exactly what to expect.
4. Not having a buffer for unforeseeable events.
Costs over time can increase and sometimes your estimates aren’t accurate because you didn’t factor in other unforeseen fees that may arise. Therefore, you need to add in some extra cash in your budget for potential shifts in productions costs, input materials, shipping changes and more.
At the same time, choose your packaging carefully. You don’t want the item to be too tight a fit in the packaging so leave at least one inch of wiggle room and fill that with bubbles, popcorns or tissue wrap for protection.
5. Setting Unrealistic Targets and Deadlines
A problem many crowdfunders face is setting up targets and deadlines that are just too difficult to meet. It is crucial to set up the right targets and time needed to achieve your goals.
Getting your deadlines wrong will lead to delays, contributors losing trust in your endeavors and it will ruin your reputation. You may also be unable to gather enough attention from contributors if you don’t meet your goals.
Plan ahead well, map out all possible delays that could occur and create a buffer for such events.
6. Failing to attract attention
Whichever crowdfunding platform you may choose, they will try to showcase the most successful ones on their homepage and through their email marketing campaigns. This is, however, likely not enough to attract a lot of attention to your project and thus, to gather a lot of money.
You may therefore want to look into working with marketing agencies, or higher someone who knows what he or she is doing. Also, you should create interest before creating our campaign. Creating a campaign first and then starting to generate interest is the biggest mistake you can make. You only have limited time to reach your financial goal, so you want to start building interest ahead of time. At least three to four months prior to starting your campaign.
Also, make sure to not limit yourself to one country or continent. These days you can reach the whole world through the power of the internet, and the efficiency of an order fulfillment business as Floship, will allow you to ship backers cross-border, easily and cost-effectively.
7. Copyright issues
There are people who look through projects just to create and complete theirs before the original campaigner does.
To prevent this, you should use private chat areas to discuss projects, non-disclosure agreements and constant monitoring of who is looking at your data and for how long. Follow trends and alert of keywords related to your ideas. You can sign up for Google Alert and have a look at Google Trends, as well as make use of an SEO service like Ahrefs who will alert you when certain keywords start to appear on the internet.
There is also the concern that you yourself have unwittingly infringed on other copyright issues, or patents. Even worse is having to deal with patent trolls. The only protection from this is to ensure that you have had a lawyer check that your project is legally protected.
8. Not having your Fulfillment figured out
Nearly all points on this list tie into fulfillment in one way or another. Fulfillment, or Crowdfunding Fulfillment is basically the service that takes care of everything from storing your goods, pick & packing when you are ready to ship and the actual handover to couriers, track & tracing and making sure they actually arrive at the backer’s door.
It goes without saying that this is so important. Your brand image depends on your ability to deliver on your promises, providing your campaign backers with their rewards in a timely manner.
No other company has as good a reputation for dealing with Crowdfunding Fulfillment as Floship. We fulfilled more crowdfunding campaigns than any other fulfillment provider, and can also take care of your on-Demand eCommerce Fulfillment once your campaign grew out to a steady eCommerce business.
Showcasing your Floship Certified Logistics Plan badge on your Kickstarter or Indiegogo campaign profile page will show the whole world that you got your fulfillment sorted out and you will deliver upon your promise. For more information, click here to read more about the FCLP.
Get in touch today and Fulfill Backer Rewards while aiming at perfection.