How to Crowdfund Your Business Idea

Crowdfunding is a smart way to accomplish your business startup goals. If your plans are on hold due to funding, consider these tips on how to crowdfund your business idea.

Colorful crowdfunding concept graphic
December 22, 2022
EZ Texting
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Being unconventional is what led you to start your own business, so why would you take the traditional route for funding? Bypass the banks and go straight to the people. Crowdfunding can help you:

  • Reduce risk on your new venture by giving live feedback on whether your business will be in demand.
  • Allow you to test your advertising skills to see if you have what it takes to stay competitive.
  • Reduce or eliminate how much you’ll need to borrow or fund yourself.

Check out our article What is Crowdfunding to find out if your business venture is suited for this type of cash-raising endeavor. We can also help you select the types of crowdfunding that best suit your needs, and lay out the pros and cons.

Okay, you’ve educated yourself on the what’s and the why’s, are intimately acquainted with the rules, regulations, and tax obligations of crowdfunding, and binge-watched Shark Tank just for good measure. Now it’s time to dive into the how’s.

Here’s how to crowdfund your business idea and earn the funding needed while earning the integrity and reputation in the industry to make your venture a success. Let’s do this!

#1

Set Your Goal and Answer Big Questions

Before launching your campaign, you need to spend serious time answering the big question: How much cash do I need? Asking for both too little and too much can kill your idea, so it’s important to sit down and create a realistic budget.

The types of crowdfunding you choose are also key factors. If you’re just asking for donations, less may be required. If you’re rewarding your donors with equity, product, or money, however, you need to make sure you have enough to fulfill those promises, and earn enough profit to continue production and succeed.

#2

Be Clear About Where the Money is Going

You can't rely solely on your exciting idea to win people over. Sure, they'll float you a few bucks if they think you're onto something, but the big donors want to know how their cash helps. You can't fault them there. Make sure your campaign also communicates your passion and dedication to your business.

Write a clear-cut business plan, just like you would for a formal lender. Keep it short and sweet, but make sure it includes what the money is budgeted for and a timeline of what happens when your campaign succeeds.

Most importantly, if you've promised your investors anything, let them know exactly when they should expect it. This also helps you because it gives you deadlines and pushes you to ensure you live up to them.

#3

Consider Your Customer Before Your Marketing Plan

The importance of going viral may come to mind when you think of how to crowdfund your business idea. But really, it depends on what you're trying to promote and finding the right audience for it.

For instance, say you’ve decided to start a crowdfunding campaign to open a vegan restaurant in your town. Reaching people outside your community will help your campaign, but you’ll most likely get funding from locals and businesses who will frequent your place.

Consider focusing a portion of your marketing on local community groups and blogs. It may also make sense to call your local news stations to see if they’d be willing to talk about it on air.

Think about your customers when choosing your social media, too. If your service or product is used by an older demographic, a strong Tik Tok campaign may not be as beneficial as Facebook or Instagram.

Make sure to explore venues beyond the internet regarding the types of crowdfunding campaigns you will use. For example, advertise your campaign at social gatherings and expos or use a service like EZ Texting to get your message to your investors' phones immediately. These methods are classic for a reason.

#4

Keep It Short

Running a short campaign sounds counterproductive, right? Longer campaigns mean more time for the donations to roll in, so it makes sense to stretch it out, right?

Nope. They say time is money, and for a good reason. Short campaigns can:

  • Keep investors interested. Thanks to the internet, our attention span tends to be shorter. We want resolution and gratification now.
  • It may attract repeat donors. If someone contributes to your campaign, they'll keep an eye on it to see how it's doing. Then, as the deadline approaches and your goal gets closer, they may make additional contributions to ensure you hit that goal within the deadline.
  • It saves you time and energy. If you have a hit on your hands, your crowdfunding campaign will likely succeed. For instance, Palmer Luckey, the creator of the VR device Oculus Rift, hit his initial goal within hours. If you aren't successful within a month or two, it could be a sign that you must regroup and develop ways to sharpen your product and advertising efforts.

#5

Show Them Your Passion

If you’ve opted to promote your campaign via a popular crowdfunding platform, you need to stand out and connect to investors. Show them how excited you are about this business and how willing you are to make the sacrifices and work needed for success.

Post videos of yourself sharing your dream and how it will help the community or the user. Keep the videos short (mini attention spans strike again) but show the real you. You can also use Facebook Reels, Instagram Stories, and TikTok to convey your message.

Options like crowdfunding, online stores, and advertising methods like EZ Texting make it an exciting time for small business owners and entrepreneurs. Solutions like these mean you'll likely hit your goals and accomplish your dreams.

It’s satisfying and heartwarming to reach out to like-minded individuals and get support. It’s encouraging to know that the inventors of multi-million-dollar products such as Peloton or Pop Socket started their business by crowdfunding. If they can do it, you can too.

Starting a business is a major life milestone, and you should be proud of starting the journey. Let others see your passion; they will feel more invested in contributing to and celebrating your success. The beauty of crowdfunding is the community it creates, so get out there and find your people!

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