There are a lot of people getting into crowdfunding nowadays because it has given a lot of business-minded individuals the chance to get the initial capital they need. This is perfect for small startups as well as SMEs because they are considered to be just outside the reach of big and traditional lenders when it comes to loan applications.
This is not to say that they will never be approved for a business loan with the banks but crowdfunding has a better chance of producing the initial capital they need because they are talking directly with the people that will essentially be their end users. Social funding puts in a system in place where those that needs financial support are given an audience with the people that can help them raise that amount.
But as project initiators use the platform, there are still campaigns that fail to meet their funding objective. There are challenges and mistakes that they seem to make and it would be a good idea to run through some of the most common pitfalls people make. This helps you manage expectations and be able to identify and plan your next move.
Here are some of the most common mistakes people make and some of the things you can work around on to increase your chances of succeeding with your crowdfunding project.
- Unrealistic target amount. As much as you want to raise a big amount for the campaign, you need to be realistic with what you need to start off the business. You might be hoping to get $1 million when all you really need is about $100,000. Some investors might see through this and discourage them from putting money in your campaign. Be specific and work with what you need to be able to start your business.
- Presenting an unclear idea. When you put out your project online, you need to make sure that you are presenting the best project out there. One way of doing this is to ensure that you are proposing a clear-cut project with details that are easy to digest and understand. You might fall into the trap of using industry lingo and abbreviations that would be hard for common people to understand. It is a good idea to have someone from your prospective target investors go through your presentation to gauge how it would be read and understood by those deciding your financial fate.
- Failing to deliver after the fact. After you have successfully raised the money and concluded a successful crowdfunding campaign, the last thing you need is failing to deliver the product to your investors. This will put your reputation at risk as well as other projects and even the crowdfunding company hosting your campaign. You need to be able to follow through with your project and deliver your promises to your investors.
- Working on the wrong timeframe. There are times when you just want to get the campaign done and over with and you do not put too much regard with proper planning when it comes to timing your campaign. There could be times when you try to work with a too short of a timeline that you miss out on prospective investors towards the home stretch when you are just picking up steam. Then there are times where you run a very long campaign and the interest dries up over time causing you to miss your goal.
This article is written by the Crowdfunders Editorial Team. In Asia, Crowdfunders.Asia is a leading portal on providing news related to crowdfunding, start-up, property and business. It is operated by CoAssets.com. CoAssets is South East Asia’s first listed and largest real estate crowdfunding platform. If you have any Crowdfunding news or stories to share, please email [email protected]