Crowdfunding and Social Media: Powerful Business Tools
Crowdfunding has become not only a trendy, tech-friendly method of raising money, but also one of the easier and more lucrative project funding options.
Now viewed as a viable alternative to a traditional business loan, crowdfunding allows well-established businesses to set up funding campaigns and take donations for causes, new products and various startup projects.
This means that anyone who’s willing would have the chance to either donate or invest in what your company is doing.
If you’re able to meet your funding goal this way, you bypass the bank loan and avoid having to accrue interest or even having to pay the money pack, since crowdfunding is a donation based process.
Where does the “crowd” come from?
As mentioned, those who donate could be anybody who sees your campaign and decides they want to contribute, which brings up a fine point: How do people see your campaign?
The most effective tool for making your crowdfunding campaign publicly visible is social media. This means that ideally, businesses that already have a strong and active social media following are the best candidates to fund projects in this fashion.
If you decide to start a crowdfunding campaign and then try to cobble together some sort of social media presence, it’s not going to work.
Why Social Media Helps
Remember, you’re asking people to donate and in some cases, invest.
Either way, that means you need to target people who believe in what you’re doing and understand the mission statement of your company. Simply putting an ad in the paper and hoping that random people will be sympathetic to your cause will do little (if anything) to help you.
The reason social media accounts work is because they’ve already helped you build connections and relationships with people who would be the most likely to make a donation.
If that mechanism is already in place and the integration between crowdfunding sites and your social media accounts is easy to take advantage of, then it’s easily your best shot at marketing your campaign and meeting your goals.
Not only will your followers be able to donate, but they’re be able to get your campaign in front of those they know who would also be likely to give.
A Few Pointers
So if you’re a business planning to delve into the world of crowdfunding and think you have a shot at a few successful campaigns, I’d recommend starting with the following tips:
1. Build it out on your social media accounts before launching.
The day you start your campaign is a big day, but make sure that people also know it’s coming. Again, a vibrant social media following is the best way to make this happen.
2. Keep expectations at reasonable levels.
It’s fine to be optimistic, but with money you’ve got to be realistic as well. Know that while crowdfunding can be successful, it’s a difficult marketing landscape that you need to measure carefully before jumping in. If your goal is too high, you can discourage loyal followers from giving, so make sure to manage expectations and come up with reachable goals.
3. Know the basic of social media marketing beforehand.
You might have a large social media following, but it helps to know the basics of marketing an idea or campaign on those accounts before you dive in.
Kickstarter, a third-party crowdfunding website, has roughly a 40 percent success rate when it comes to campaigns reaching their goals. So keep in mind that it’s not a full proof method and that the chances for you falling short are very reel.
At the same time, the amount of work you put in is going to correlate somewhat to the results. There’s some luck involved, but how you’re able to harness your social media accounts and make them work for you will have a lot to say about how much you bring in.
It might just be enough to give your business a boost and get you closer to meeting some of your expansion goals.
Camille McClane is a freelance writer in Southern California. She often writes on technology and social media topics.