Starting a new project can be a huge undertaking and there are risks involved that crowdfunding campaigns actually negate. It used to be that entrepreneurs only got to do a substantial market test by manufacturing and seeing if it sank or swam. Now with platforms like Kickstarter, IndieGOGO and Kiva, you can learn more about your product and your market then ever before. Here are five reasons why you should do a crowdfunding campaign.
Testing the Market.
There's only a certain amount of information you can glean about price points, colors and features from doing product research and polling your target market. The real test is seeing if people are willing to invest in your idea. With crowdfunding, you're able to tell if people actually buy into you and your project.
Putting up the cash necessary to develop the project, produce samples, buy inventory and hoping people buy can be the biggest detraction to attempting to start your own business. By pre-selling the items, you only have to create a MVP (Minimum Viable Product) to create promo materials instead of investing a plethora of funds into something and attempting to sell them.
Logistics and Budgeting.
Having an idea and executing it can be two hugely different experiences. During my first Kickstarter Campaign I really enjoyed getting into the numbers, doing bid spreads, calculating shipping costs, and figuring out logistics. This process really helps ground the idea and make it tangible. You want to make sure that you set yourself up to win, and that you don't have to go back and ask your backers for more money. This doesn't happen in real life and these first backers may be the foundation of your growing business.
Do you know how to communicate your "Why", the value and benefits of your product? You'll get tons of practice when creating your launch page, video and pitching it to the media. If your message is muddled, it will be difficult for people to latch on and connect with your idea, leaving you in the dust. Have someone you respect work on your pitch with you and don't be afraid to go back and tweak things before you launch. For my second Kickstarter Campaign, it was much easier to do it because I had gotten very clear on my product, my messaging and my why. I wrote my video script, shot it and edited it all in one day!
Word of Mouth is the most effective type of marketing. In fact, it results in "5x more sales then a paid media impression." The more people are able to share your story, the stronger your brand will be, especially if this praise is coming from people they know and trust. In addition, this is an amazing opportunity to practice selling yourself. What percentage of your friends actually know about your new project? How can they support you in it if they don't know what you're doing? This is "pressure cooker" not only forces you out of your comfort zone, it opens you up to a new level of support you might not know you have.
Crowdfunding campaigns can be a very heavy lift, however it is an amazing concentration of all the work you need to do in order to be successful in business. Need some advice on building a crowdfunding campaign for yourself? Send us an email!