What is crowdfunding for business growth and how can small businesses use it to scale?
Well, you can get lots of crowdfunding tips all over the internet. But I got gems from someone who has actually done it! A solo entrepreneur who successfully raised £10,000 in 35 days on her first attempt at crowdfunding! So, some of the info in this post comes straight from someone who has done, what you may want to do, with few resources.
Getting business funding is difficult, especially for entrepreneurs from underrepresented groups. So, I hope this post inspires you to seek alternative routes outside traditional bank loans to scale your business, no matter how small you are!
Crowdfunding introduces an exciting and accessible avenue for businesses to secure financial support
It’s not just about ‘securing the bag’ but nurturing a loyal fan base who can become your brand ambassadors – creating that emotional connection. This brand ambassador loyalty can translate into word-of-mouth marketing too, which is critical for young businesses.
It’s about bringing others along to be a part of your business growth journey. To do this you’ll need to fine-tune your brand story and most importantly remember that your campaign is not about you! Crowdfunding for business startups is a viable way to get the cash injection your venture needs.
Crowdfunding is about encouraging a big group of people to each chip in a little bit of money to help you grow your business
Alright, imagine that you’ve decided to punch fear in the face, stop procrastinating and scale your small business. This is all great, you are moving forward! But we all know starting and growing a business costs money.
Instead of going to one organisation, like a bank, you ask lots of people, including friends, family and even strangers on the internet, to give you small amounts of money. They do this because YOU have persuaded them to believe in your idea and so they want to support you.
Now, why is crowdfunding so awesome?
Well, first off, it helps you raise the money you need without having to borrow it from a bank or give up a big chunk of your business to investors. Plus, as I mentioned above, you can birth new cheerleaders from your crowd who are rooting for you to succeed!
Another great thing about crowdfunding is that it’s not just about ‘securing the bag’, remember. It’s also a way to spread the word about your business and get people excited about what you’re doing. So, it’s like getting money and marketing all in one!
When I interviewed the athleisure brand owner of Bind London about how she raised £10,000 in 30 days, she corroborated what I mentioned above and dropped some other gems for small business owners wanting to tread the same path. Like, spreading your crowdfund period over two payday dates, so people are in a better financial position to contribute.
A successful crowdfunding campaign provides you with invaluable market validation
It offers insights into your target consumer interests and whether your brand’s mission and purpose resonate with the wider public. One thing that surprised me in the Bind London interview was that some of the contributors were not from their target audience. They were just convinced of the brand’s ethos and wanted to see it thrive.
When considering crowdfunding, it’s important to select the option that best aligns with your business model and goals
There are several main types of crowdfunding, each with its unique characteristics and intended use cases.
Donation-based crowdfunding
This model is typically associated with charitable causes, where backers donate funds without the expectation of receiving anything in return. It can also be utilised for business needs such as relief programs or community initiatives to support a non-profit cause associated with a for-profit business.
Rewards-based crowdfunding
Businesses offer tangible rewards or products in return for financial support. This is ideal for launching new products, building brand awareness, and engaging customers. The key is to offer compelling, exclusive rewards that resonate with the audience you aim to attract.
Equity-based crowdfunding
For the more financially inclined businesses, equity-based crowdfunding allows backers to become part-owners of your business by exchanging financial support for equity shares. This is gaining popularity as a startup and scale-up funding alternative.
Debt-based crowdfunding
Also known as peer-to-peer lending, this model involves borrowing from investors with the promise to pay the loan back with interest. It’s often less risky for investors than equity-based models and an appealing choice for businesses with a clear plan for loan repayment.
For a crowdfunding campaign to flourish, it’s imperative to communicate a brand narrative that’s both sincere and persuasive
1. Define your goal
Your project should have a clear financial target, which includes a breakdown of how the funds will be used. Whether it’s to fund a product launch or to develop new services, transparency about the ‘why’ behind your ask is crucial.
2. Know your audience
Understanding the people you’re addressing is fundamental. Craft a message that resonates with their values, interests, and needs. Use language and visuals that speak directly to them, inviting them to be a part of your brand’s story.
3. Choose the right platform
Select a crowdfunding platform that best suits your business and goals. Different platforms cater to different industries and campaign types. Some are more general, while others are niche-focused, supporting specific sectors.
4. Design an irresistible pitch
The most effective campaigns share a compelling story and present a clear value proposition. Your pitch should be creative, engaging, and focused on highlighting how your product or service will address a specific consumer need.
5. Set attractive rewards
Your rewards should offer genuine value and appeal to your audience. Think beyond discounts and consider unique experiences, exclusive access, or limited-edition products to incentivise backers.
6. Lay the groundwork
A successful campaign isn’t built overnight. Lay the groundwork by building a strong online presence, nurturing your audience through regular communication, and generating anticipation well before launch.
7. Engage and keep engaging
Engagement is a two-way street. Be responsive to your backers’ questions, comments, and concerns. Whether it’s through social media, a dedicated website, or the crowdfunding platform itself, keep the conversation active and genuine.
8. Secure early backing
It’s often easier to inspire confidence in your project when you already have some financial support. Secure early endorsements from friends, family, and your immediate network to kickstart your campaign’s momentum.
9. Tell impactful stories
Throughout your campaign, share stories of how the funds will make a difference. This adds a personal touch, enhancing the emotional connection with your backers and further solidifying their support.
10. Be tenacious
Crowdfunding is an uphill battle. Be prepared for setbacks, and ready to pivot your strategy if needed. What might at first seem like a failure, could actually be a learning opportunity or a story of resilience that resonates with your audience.
11. Show gratitude
A personalised thank you goes a long way. Acknowledge your backers’ support in a meaningful way, making them feel appreciated and part of a bigger narrative.
Whatever you’re doing to grow your business, move with purpose!
The Purpose Copywriter and Content Strategist
P.S. If you gained something from this content, please like and/or comment so that I can keep sharing valuable information like this with you.
P.P.S. If you don’t want your business marketing to fall off a cliff because you’re too busy trying to figure out how to raise business funding, contact me and check out how I can help you.
Jeitent Content Marketing 
Anything to say? write it here!