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6 Secrets For How Small Businesses Can Optimize Crowdfunding

6 Secrets For How Small Businesses Can Optimize Crowdfunding

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Published by: Crowdsourcing.org on Sep 27, 2011
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02/03/2013

 
6 Secrets For How Small Businesses Can Optimize Crowdfunding
By: Slava Rubin|Sep. 26, 2011 The environment for
today’s small business is
more volatile than ever.Aspiring entrepreneurs arefaced with several newchallenges: obtaining aloan continues to becomemore difficult, banks arerefuting any applicationwith less than two yearsworth of a track record, andcredit card rates arecontinuing to rise. Is thisthe worst of times ormaybe it is the best of times?While all this volatility is indeed challenging, at the same time, the marketplace forsmall business owners is actually more dynamic and exciting than ever. Thanks tothe convening power of the Internet, social media, and online transactions, gettingcapital for your start-up is actually easier than it seems.With crowdsourced fundraising, anyone with a passion, business idea, or cause canpost their campaign on an online funding platform to raise capital for just aboutany goal. At IndieGoGo,we connect aspiring innovators, creators, inventors, and entrepreneurs with the millions of people worldwide who want to be a part of exciting new ventures. From kitesurfing to cupcakes, anyone can create acampaign to fund any dream or idea.
 
Below are the 6 secrets for how small business can optimize crowdfunding:
1. Prove Demand Through Presales and Mitigate Risk
 If you are looking for bank funding or venture capital to start your business, oftentimes you will need to prove that you have a good and profitable idea. Throughcrowdfunding, you have the opportunity to prove demand before creating yourproduct inventory. People who believe in your idea will fund your venture. Bygaining this initial foundation, you are easily able to prove the need for yourproduct before it goes into full existence. This first support helps because mostinstitutions are risk-averse and hate being the first money in.Emmy's Organics was initially turned down by many local banks in upstate NewYork.However, after running their campaign to expand their gluten-free macaroonbusiness, they raised the $15,000 needed to update their packaging, and are nowselling in supermarkets making gluten-free eaters happy everywhere.
2. $$$$
 Crowdfunding of course gets you money, plain and simple. Whether you raise thefull amount, surpass your goal amount, or just barely make it, IndieGoGo allowsyou to keep every dollar minus a small transaction fee.After word spread about theeMAKER Huxley 4,the 3D printer startup's funding was exceeded by 429%. The eMAKER campaign proved demand by selling 300+kits and raising nearly $160,000.
3. Test and Refine Marketing Strategy
Starting a crowdfunding campaign allows you to test out your marketing strategyand gives you room for trial and error in order to refine it. When someone validatesyour idea by putting money down, they've also just confirmed your target market.In the world of Twitter, Facebook 
,and targeted emails, it’s easier than ever to test
your marketing message and approach.
 
With thein.gredients campaign, the Austin based creators were able to test out
their idea of the nation’s first zero
-waste, package- free grocery store before theyopened. Their campaign, which included a creative video and messaging aroundGreen, was used successfully to target the environmentally conscious market.Having fully funded their campaign they are well on their way to the green grocerystore they had envisioned.
4. Extra Promotion
A bank loan can get you money but it ends there. Crowdfunding opens the door formany more avenues of promotion. Once you have assembled and developed anengaging campaign, IndieGoGo allows you to utilize and activate your socialgraph through social media. A robust online presence gives a campaign energy
and starts the “snowball affect” of participation.
 As a campaign gains traction on IndieGoGo, we use a custom algorithm todetermine its "GoGoFactor", this helps discern which campaigns are featured onthe homepage, the site's blog, or in media. The GoGoFactor takes into account over30 variables including funding, comments, shares and other campaign activity.San Francisco-based Mission Cheese received contributions from 130 sources after sharing regular updates on their progress.
After being featured on IndieGoGo’s
homepage they were included in several major press outlets. Following all theexcitement regarding the new cheese shop, the Mayor of San Francisco includedMission Cheese in
a city event that highlighted the city’s emerging entrepreneurs.
 
5. Curry Serendipity
 Aggregating a crowd through your campaign efforts sets in motion manyunforeseen possibilities. By making an impassioned pitch to the people in yournetwork and beyond, you are able to put yourself out there and discover whatopportunities and resources might come your way.In 2009, the Greek economy collapsed, tourism rates plummeted, taxes sky-rocketed, and eReaders pinched hard on book sales. As austerity became the newnormal in 2010, Atlantis Books found that its methods were no longer sustainable.

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