Imagine a world where you simply ask strangers online to give you money for whatever project you’d like to do. And, if they believe your idea is good enough, they’ll just give it to you. This sounds like something that’s too good to be true, right? Well, it is true. It’s called crowdfunding, and in the right circumstances, it could be a fantastic way to help fund your business to get it off the ground.
Crowdfunding started gaining popularity in 2009 when a website called Kickstarter launched an online platform. You simply create an account and describe the details of your campaign. How much money you will need, what type of project you’d like to get off the ground, and how your idea will make life better for your customers.
Of course, if your idea isn’t good enough for potential crowdfunders to see the value in putting money into it, you probably won’t see a cent. However, if you’ve managed to come up with a product that addresses unmet pain points of a large enough group, a crowdfunding campaign could be the answer to your lack of funds.
That all being said, creating a crowdfunding campaign to get yourself up and running might not be the best option for all business owners. Firstly, you do have to invest a bit of money in order to start the campaign (it’s not much, but if you have no money at all, there’s nothing really to do). Second, you do run the risk of putting lots of time and effort into your marketing campaign, and not seeing a cent.
The biggest danger with using crowdfunding as a way to start your business is that it no longer puts you in control, you become indebted to your funders. Because you give potential funders an initial timeline for your project to be finished before you begin your campaign, people giving you money will expect your finished product on the day you tell them it will be ready. This leaves no room for flexibility when it comes to meeting all of your proposed goals.
Another issue with crowdfunding is that it only works for businesses with a tangle product. People who will fund your idea are doing it because they want a piece of the pie. Unfortunately, putting money into something they won’t receive to their doorstep when promised is not as enticing.
If you don’t find that you qualify or want to get involved with crowdfunding, never fear. There are lots of ways to get the cash you need to start your business. Taking out a small business loan is an excellent way to have immediate working capital with a rate a payment term that you’ve worked out beforehand. For anything from equipment financing to debt consolidation, a small business loan could be your fastest way to start working on your dream business.
Ready to take your business to the next level? Find out more about the right small business loan for you with Onebox Funding, here.