Small businesses can raise money with crowdfunding.
From poor preparation to overpromising pledgers, there are many ins and outs of crowdfunding that can hinder a successful outcome. — Getty Images/Vadim_Key

Crowdfunding can be a great way to raise capital for your new business. Through sites like Kickstarter and Indiegogo, you can receive financial support from an audience of consumers who believe in your brand.

Because of its accessibility and efficiency, the crowdfunding scene has become highly competitive. To give you the best chances at success, we outlined the most common mistakes entrepreneurs make in the crowdfunding process — and how to avoid them.

[Read: How to Decide Between Crowdfunding and Venture Capitalists]

Choosing the wrong crowdfunding platform

Sometimes, running an effective crowdfunding initiative means tapping into your audience. To do so, you have to meet your audience where they are, which may be on an unconventional crowdfunding platform.

Hundreds of thousands of businesses are posting on sites like Kickstarter every day. If you’re building a product or running a business that thrives in a specific niche, seek out crowdfunding sites that address your area of business. If you’re not having success with crowdfunding, finding the right site may be half the battle.

[Read: 5 Crowdfunding Sites to Fund Your Startup]

Failing to market before launch

According to The Next Web, you need to implement a marketing strategy pre-launch to generate significant pledges. If you don’t market your product before it’s posted or released, how will people know about it? Marketing is needed throughout the full lifecycle of any business or product. That means starting before your product’s release, so your customers are not only aware, but prepared for what’s to come.

Poor preparation

Starting a business or releasing a new product is an important endeavor. You should take your crowdfunding initiative seriously. Few businesses have become successful because of lazy, haphazard preparation. If you want to start a company and build a product or service, give it your all. With the ease of technology and crowdfunding services, it can be easy to just throw a page up and see how people respond. If you don’t give your business the right attention before you start crowdfunding, it can end in failure even if you had a great idea.

Think of crowdfunding as another form of marketing and use the opportunity to further flesh out your brand identity and company story.

Not including quality videos

Quality videos are essential to business success nowadays. Without an informative, entertaining and succinct video about your business or service, you may be overlooked by many potential customers.

If you’re going to start a crowdfunding initiative, create some kind of video to tell your company’s story. Think of crowdfunding as another form of marketing and use the opportunity to further flesh out your brand identity and company story.

Neglecting to communicate with pledgers

Convincing someone to invest in your business is only the first step in your relationship with them. The hardest part about building a business is not finding new customers, but convincing existing ones to continue to value your company. The same goes for crowdfunding. Make an effort to be transparent, genuine and upfront with your pledgers. This level of attention will help your business in the long run.

Overpromising

Perhaps the biggest fault of any new business is promising too much. With an enthusiastic attitude and a can-do approach, it can be easy to bite off more than you can chew. Do your best to stay realistic and think of your business in stages. You don’t have to shoot for the moon. Your business is built brick by brick, customer by customer, not overnight.

Remember that crowdfunding can be an awesome opportunity, but it’s unlikely your business idea will go viral overnight. The most sustained success comes from methodical, relentless attention and building.

[Read: Everything You Need to Know Before You Start Crowdfunding]

Crowdfunding is an excellent opportunity for any young company. As with just about every single aspect of your business, there are mistakes you should try to avoid. When setting up a crowdfunding page, take your business idea seriously and do your best to connect with investors on the site. If you can establish genuine connections and get your business’s name out there, you could be well on the road to success.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published March 06, 2020