Make Crowdfunding Work for Your Small Business

Money should not be much of a problem for a determined entrepreneur. Sourcing funds for a start-up business or expanding your operations is made easier with crowdfunding platforms made available for small businesses. Crowd funding or crowd sourcing is a popular means of raising funds for businesses or charity today. No amount is too little in this fundraising model which makes it easier for people to place an investment, and quicker for businessmen to raise the funds they need.

crowdfundingImage courtesy of zdiviv at FreeDigitalPhotos.net

Here is a quick look on how you can make crowd funding work for you.

In a way, crowd funding is no different from online shopping. Businessmen requiring funds can simply visit a crowdfunding site to post their business ideas and find investors while potential investors can shop for business ideas that they can put their money on. Those who are looking to raise funds through this method should keep in mind that a good business plan and sales pitch is essential in enticing investors. As such, entrepreneurs need to consider their plan and pitch carefully before posting it.

There are three crowd funding styles that you can use to entice investors. Rewards-based funding makes use of free goods or services, discounts, and other incentives as benefits for their investors. Equity-based ones give out stakes or profit shares in exchange for investments, and businessmen who opt for credit-based funding usually offer to repay the invested amount with interest.

Finding the right crowdfunding site is equally important in realizing your goals. There are several sites that offer different types of service or expertise. For instance, fundable is known to offer rewards based and equity fundraising for small businesses while SoMoLend works like a credit based crowd funding. Choose a service provider that is compatible with your business plan to increase your chances of meeting your financial goals. Remember that you only reap the benefits of crowd funding if goals are met. Otherwise, the funds are returned to investors and you are back to square one.

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Business and Investments with Crowdfunding

Lack of funding is one of the common reasons why bright business ideas stay at the back burner. But this can no longer be an excuse today because there are already plenty of ways to raise funds for a new business venture. Financial institutions and Small Business Organizations are readily accessible to provide assistance for those who need capitalization. There are also Angel Investors that can help fund your venture and give you expert business advice as well. Another option that is becoming more and more popular is Crowdfunding, a fundraising method that makes use of the internet in bringing aspiring business owners and investment hunters together.

crowdfunding

One can easily find crowdfunding platforms in the
internet as they have already grown in numbers.

There are two crowdfunding models being used today. One is the donation based model where project organizers present their objectives and programs for raising funds and getting pledges or donations from a crowd of supporters. The causes for this type of model can range from social awareness campaigns to disaster relief programs. There are also donation based platforms that promote social entrepreneurship where benefactors can support livelihood programs and get products in return. On the other hand, the investment crowdfunding model allows businesses in need of capital to sell ownership stakes to potential investors. In this model, funders can enjoy the benefit of a potential return of their investment. This is a very attractive way to raise funds for capitalization as businesses need not go through the tedious process of getting a loan. It also provides a wider reach to potential investors for those who have little or no experience in running a business. The beauty of this model is that it doesn’t have any bias in terms of business size and amount of investment. A business neophyte can sell shares for a t-shirt business that he runs at home, and one can already make an investment out of $20. No business or investment is too small for the crowd that supports crowdfunding.

One can easily find crowdfunding platforms in the internet as they have already grown in numbers. Most of them are donation based but there are also sites that focus on business and investment like Crowdfunder, Somolend, and AngelList. You simply have to find the site that best suits your venture.

Image Credit:
Renjith Krishnan – FreeDigitalPhotos.Net

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