Startup Guides > 4 Steps to Crowdfunding Success

The biggest problem that many small businesses throughout the United States face is how to secure startup or initial funding from traditional lenders. Since the 2008 financial meltdown, banks are under a lot of pressure to make safer loans, resulting in stricter underwriting guidelines and fewer loans being approved.

With the advent of crowdfunding providing a more accessible option, the amount of small businesses with crowdfunding campaigns has significantly increased. There are billions of dollars being exchanged on crowdfunding platforms, and over 30 percent of small business owners would consider crowdfunding if they knew more about it. Here are four basic steps to getting started.

1. Choose the right type of funding and platform for your goal.


There are numerous crowdfunding sites, so take the time to visit several sites and browse projects similar to yours to find the platform that's right for you.

Rewards-based crowdfunding offers incentives to backers. Incentives vary based on the project being funded, often including special pricing, access to exclusive events, discounts or new products.

Equity-based crowdfunding offers a percentage of the company to lenders in exchange for cash. In an equity exchange, you are giving up a portion of your ownership in return for funds. This is a big step for many business owners, so if you are considering equity-based crowdfunding, it's a good practice to have your attorney and accountant give you advice.

When researching crowdfunding platforms, make sure you weigh all the factors thoroughly, including fee comparisons. Also, consult an experienced attorney or accountant for additional help.

2. Plan, plan and plan.

The challenges of crowdfunding are similar to those of marketing. Success with crowdfunding depends on good marketing. So plan on investing heavily in strategy and creative asset development, such as business plans and campaign videos.

Remember, there is no crowdfunding without a crowd. Your vision must be strong to get people excited about your project. This requires a concerted effort to grow your network. Presenting a polished, professional campaign is one of the keys to gaining the trust of would-be backers.

3. Expand your network.

Think of your funding campaign as an opportunity to test market demand. Use this time to expand your network, validate your market, refine your offering and test messaging. Feedback is very important, as it will help improve your product. The crowd members who care enough to offer feedback and make suggestions are not only your best customers; they're your biggest brand promoters.

Sites like 40Billion.com make this easy by broadcasting and promoting your crowdfunding page to its large network of several million users across the most popular social networking sites for businesses - including Twitter, LinkedIn, 40Billion, and even Facebook.

4. Connect.

During your campaign, focus on connecting with the crowd and getting to know your customers. Innovative services like tweet ads and promoted company listings were created for crowdfunding entrepreneurs to tap into a growing, active network online without spending thousands on pay-per-click ads or traditional advertising.

Your investment in building a strong network is just as vital to your long-term success as their monetary investment in your project. Remember, you're cultivating more than a crowd of backers; you're creating brand champions and long-term relationships.

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