A tale of two cities:
My pal Jeff in New York wanted to make a documentary film but didn’t have enough money to fund the project. He had heard about crowdfunding and decided to give it a shot. He made a quick video about his movie and put it up on Kickstarter. Jeff said to me, “I figure people will definitely donate the money I need if I give them an Associate Producer credit”.
A colleague of mine, Jonah, wanted to launch a food truck in Portland, Oregon. He also opted to crowdfund his idea with Kickstarter, but was much more methodical about it. Yes, he created a solid video, but he also cultivated a great list of people to pitch to once he launched his campaign. He also thought very strategically about the rewards people would get, and created tiers that made sense. He put three months into his campaign before he even posted it on Kickstarter, and even then, as he told me later, “I worked it. I treated it like a marketing campaign.”
Guess which entrepreneur met his funding goal? You guessed it – Jonah.
So yes, there is a right way and a wrong way to go about crowdfunding the dream. Here are the dos and don’ts:
Do have a concrete, focused product/solution to a problem: It should be no surprise that people will be much more likely to invest their time and money into something that they see solves a problem, especially if it is a problem that they personally have. Potential backers will stay away if your vision is too muddled or abstract.
As such, you need to be sure that your product or service is simple, clear, focused and logical. You are also more likely to be successful if the problem you are attempting to solve is fairly ubiquitous.
And for the record, physical objects, and games, have the highest rate of success on Kickstarter, whereas documentaries, shorts, and music are by far most likely to fail.
Do know who your product is for, and market to them before launching: Jonah intuitively had the right idea. Thoroughness and forethought are needed throughout every phase of your campaign, but especially before launching. Prior to the launch, you should be
doing plenty of marketing to your tribe and target audience via email and social media – regularly sharing ideas, prototypes, sketches, your mission, etc. Remind your audience over and over again about your great solution to this problem so that they become familiar with it.
Getting your audience excited ahead of time and wanting to be a part of your solution is what works.
Have other sources of income: Kickstarter pledges should not be your only source of funding. There are several reasons for this:
- Backers will want to see that you have skin in the game
- Also, you need capital to run a campaign – to make prototypes, videos, for marketing, and to handle unexpected road blocks or changes of plan
Your Kickstarter funds should be going toward manufacturing and distribution, while your own money should be for things like paying office rent, etc.
Don’t set your funding goal too high: A lot of Kickstarter campaigns make the #1 mistake of setting their funding goal much too high, thinking that it reflects their drive and passion. Yes, you should be proud of that drive, but your funding goal needs to be more strategic and realistic.
Your Kickstarter goal should reflect your actual funding needs, and should be an amount that you feel you can reach. People feel much more confident investing in something that looks like it’s already winning, so if your page reads “200% of goal,” you are sure to attract more potential backers.
For reference, the median funding goal for the top one thousand most successful Kickstarter campaigns is $1,000.00, whereas most campaigns set a goal of $5,000.00 or more
Don’t make your campaign a second or third priority: This project should be your first priority, and you and each team member should be spending enough time ensuring its success. People are not just going to give you money because you posted a cool video on Kickstarter; that’s not how it works.
Perhaps the most crucial element of this is prioritizing your backers and potential backers. If you do your campaign right, your inbox will be overflowing with questions and introductions. You need to promptly respond to those queries in a personal, informative, and transparent manner. Give folks regular updates. Get your rewards out the door on time. Respond to requests for additional info.
The key here is to act in such a way that backers will want to take a chance on your vision. Do that, and they will help you, well, kick start the dream.
About Steve Strauss
Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can listen to his weekly podcast, Small Business Success, visit his new website TheSelfEmployed, and follow him on Twitter. © Steven D. Strauss.
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