There has been a big change in the way that small, non-traditional businesses have gone about raising capital. It is called "crowd source funding." If you are on any form of social media - Facebook, Tumblr or Instagram, for instance - it is possible that you have seen some version of this. It first became recognized as a way for people to raise money for charity, either something typical such as a Walk for Life event or for a specific medical emergency. Now these websites are being utilized by start-up companies as well as artists looking for an edge. But what exactly is crowd source funding, how does it work, and is it right for you?
A typical crowd source funding campaign involves a direct appeal to a targeted audience, with the expectation that those people will share it with other, like-minded people who may not in the first circle of contact with the originator. The first step is to partner up with a website created to host such events. Certain websites include Kickstarter, GoFundMe and Indigogo. A webpage is created with a secure link for donations, an explanation of what the fundraising is for and a target amount and timeline is displayed so people can see how everything is progressing.
When being done for a charitable endeavor, the goals are straightforward and there is rarely, if ever, a platform of rewards. However, when it is a for-profit enterprise like a small business or individual artist, in return for a contribution, a person receives a material item. A perfect example is a musical band using this approach to raise money to finance a new recording. In return, they offer first edition CD's, signed memorabilia and even private concerts, based on how much money an individual donates.
The challenge that most people face, especially those doing it as a way to get their business off the ground, is making sure they are managing the project effectively. Many simply sign up on one of the websites, post a link on the social media page, and then wonder why nothing is happening. Many search engine optimization companies have stepped in and offered crowd source funding management as one of their services. Because they already have the experience with keyword analysis and effective internet marketing, they are able to help these new clients find target audiences outside of their own circle of influence.
Getting any new business started in today's economy can be a challenge, and even directly appealing to people for assistance is an overwhelming process. By working with a company that can successfully manage a crowd source funding campaign, this process can be handled more smoothly and efficiently, allowing you to focus where your strengths lie and build a successful business.
Jack Terry is a freelance writer who specializes in covering small businesses and how they survive in the changing economy. http://www.teamwildflower.com