Small Business and Crowdfunding

Small Business and Crowdfunding

Crowdfunding can be a powerful fundraising tool for personal projects, startups and small businesses who need some financing help. It allows people to seek funds online as a loan for their company that they will pay back with interest over time. People may choose to invest in certain crowdfunds to make a profit while supporting a small business.

One of the reasons businesses choose crowdfunding as a way to obtain loans is that they are often more flexible than bank loans. Getting a loan from a bank can be more complex with a long application process and stricter rules about what the funds can be used for. With crowdfunding it can be easier to apply depending on the website used and businesses have more freedom with their funds.

There are two main types of crowdfunding known as reward crowdfunding and equity crowdfunding. Reward crowdfunding is a way to provide incentives for people to donate their money online such as VIP access, discounts, new versions of products or other rewards. Equity crowdfunding allows investors to provide money in exchange for shares in the company.

The most popular websites used for crowdfunding include Kickstarter which was one of the first reward crowdfunding platforms and is a great option for funding creative projects like films, video games or recording. Another commonly used crowdfunding site is GoFundMe which is one of the largest fundraising platforms with a community of over 50 million donors. These kinds of sites tend to charge processing fees and 5 percent of all funds raised to use their platform.

If you are considering using a crowdfunding platform for your small business it is important to keep in mind that you will need to a marketing plan in place in order to achieve your goal. Overall, crowdfunding can be a useful choice for businesses who need new resources for financial support.

Matt Ramage is founder of Emarketed a web marketing agency located in Los Angeles. He loves coffee, good design, and helping businesses improve their look and getting found on the Internet.

Attended: CalTech/MIT Enterprise Forum’s Crowdsourcing Seminar

The latest from the CalTech/MIT Enterprise Forum provided insight on the power of “crowdsourcing”. The seminar entitled, Crowdsourcing for the Entrepreneur: Unlocking the Power if Online Communities showcased an exceptional panel of speakers, including representatives from Microsoft, Profounder, and Salesforce.

What is Crowdsourcing?

The morning began with a general overview of what crowdsourcing is, and why it’s a useful tool that should be utilized in all businesses. Using this form of outsourcing is not only a problem solving mechanism, but also a way to access low cost marketing opportunities.

As it turns out, feedback is the still the most constructive way to product improvement and achieving customer loyalty. It’s no surprise that asking consumers to provide thoughts and opinions is an easy way to build on existing products and services – but Peter Coffee of Salesforce reinforced this idea with an emphasis on customer satisfaction.

Positive engagement with the people who are actually using your product, will allow the crowd of users to get what thecrowdsourcingy want by voicing real, quality feedback, therefore creating the knowledge you need. When customers are happy, the product gets better and the loyalty is effortless. Several of the panelists suggested an “idea exchange” to coincide with the feedback analysis of crowdsourcing. Letting the crowd discuss your product in a forum setting can lead the way to new markets and new customers.

Another aspect that came up during Q&A with the panel was how to direct crowdsourcing and how it can show results. We already know most marketing strategies are an investment, but crowdsourcing is one of the only tools that is cost efficient and works off the assets you already have, customers. According to the panel, making sure there is a clear direction for your crowdsourcing technique can show a powerful result. What will keep your existing customers loyal?

Ultimately, adapting to local and different markets is what is going to drive business. Take the iPad for example. Apple used its existing laptop customers’ complaints and suggestions to envision a whole new product that came with an entirely new market. It’s this type of information that can keep your company innovative.

Now, how can you use a crowdsourcing tool to fuel your business? Find out what works, what people want from an existing product, and what will keep customers referring their friends.

Matt Ramage is founder of Emarketed a web marketing agency located in Los Angeles. He loves coffee, good design, and helping businesses improve their look and getting found on the Internet.