For the majority of startups and new businesses, raising capital or funding to get started can be a challenge. Banks are unwilling to invest in unproven business models and venture capital is often limited to more established entrepreneurs with proven track records. For small businesses, crowdfunding is often a viable option. Crowdfunding can not only help your business raise the funds it needs to launch, but it can also transform your business idea from prototype to product. In this blog, we’ll help you determine whether crowdfunding is right for your product idea.
Crowdfunding can be a good idea for your business for several reasons. First, it can be a fast and efficient way to raise funds with minimal fees. Additionally, pitching your project or idea through a crowdfunding platform can offer a pre-launch marketing boost to your brand, potentially resulting in increased pre-sales, exposure and press coverage. Additionally, it’s a great way to test demand for your idea with your target audience. If people are not interested in investing, it might be a sign that your product needs more work. Moreover, crowdfunding investors are more likely to become loyal customers who spread the word about your business.
However, crowdfunding isn’t right for every business or product idea. For one, successfully raising capital or funding via a crowdfunding platform can be just as difficult as the more traditional means of raising capital via banks or loans. Additionally, not all projects that apply to join a crowdfunding platform will necessarily receive approval to proceed. Similarly, if your project is given the greenlight to proceed on a platform, there’s no guarantee that you’ll raise all the funding you need. After all, the success rate of crowdfunding projects that receive full funding is only 39% on Kickstarter. And if you fail to meet your funding target, any raised funds will revert back to investors, potentially resulting in business impact and reputational damage.
If crowdfunding doesn’t work for your product, there are other avenues to position your business and gain maximum exposure with retailers like Amazon, Best Buy, or QVC. Retailers offer plenty of benefits to new brands. For example, given the sheer volume of daily shoppers on Amazon, Best Buy, or QVC, new brands won’t have trouble attracting eyeballs to their product. On the other hand, there are other challenges to remain cognizant of. To stand out in an ocean of products, all aspects of your product require time and attention, from photography to product descriptions, product messaging and competitive pricing.
Overall, if you believe crowdfunding is the right path for your business, it’s important to do your research, have a plan of action and a strategy that is reasonable, achievable and measurable. After all, a successful crowdfunding campaign can help elevate your business to magnificent heights. If crowdfunding doesn’t work for your product, there are other ways to take your product market such as the retail route. If retail is the route for you, please contact us at info@retailbound.com or use our contact us form to get more information.
