So, you’ve decided that you’d like to run a crowdfunding campaign. You know all the perks of crowdfunding — influx of capital, strengthened customer relationships, increased marketing potential — but now you need the crowd to do it.
We talked with Bill Huston, crowdfunding expert, coach, and founder of Crowd-Max about how you can best build your crowd to ensure your crowdfunding campaign’s success. Bill has created troves of information for small businesses interested in crowdfunding, from blog posts to online courses to an accelerator program and one-on-one counseling.
“You can have everything in order, your term sheet, your documentation, but if you don’t have the crowd to back you up, you won’t get the money you need to raise,” says Bill. Follow us as we cover the basics of why it’s important to build a crowd before crowdfunding, and some strategies to create a large, engaged community around your business.
In this article, we'll cover the following:
Why you need to build a crowd to run a crowdfunding campaign
It might seem like we’re stating the obvious saying that you need a crowd in order to crowdfund successfully — after all, it’s part of the word! However, many small businesses rush into crowdfunding without considering whether or not they have a strong enough social network for the job.
Some businesses have very small networks of highly engaged followers who want to contribute. They’re able to raise a decent amount of money when they crowdfund, but they could definitely have raised more.
Others have the opposite dilemma - they have large numbers of followers on social media, in the 10s of thousands, but those followers don’t invest in them by contributing to their crowdfunding campaign. Maybe those followers are bots, maybe they follow the business but aren’t kept engaged and so don’t feel compelled to fund them.
This is why crowd-building is not just about gathering large numbers of followers behind your business, but it’s also about crafting an engaging relationship between your business and these followers. This will better ensure a successful result to your crowdfunding campaign by maximizing numbers as well as investments.
The Return on Crowd, and how it can help your business
What we just described for you is also known as the Return on Crowd (ROC), but this relationship extends far beyond the end date of your crowdfunding campaign.
Crowdfunding can be a great way of bringing folks into your crowd, as it is a unique way of marketing your business to the outside world. People who see businesses that crowdfund can see that the business is community-minded, and they’ll want to support them.
In addition, crowdfunding strengthens your relationship with your customers by giving them a stake in your business. If you invest somewhere, you’re going to want it to succeed, aren’t you? This translates into legions of loyal customers who will spend time and money on your business, and encourage their friends to patronize you too.
We’ve said it before, crowd-building for your crowdfunding campaign is about a relationship between you and your customers and potential investors. Just like a relationship doesn’t end with a wedding but rather continues on into a happy marriage, this connection between business and customers doesn’t end with the crowdfunding campaign, but continues on to benefit the business for years to come.
How to start building your small business’s crowd with your inner circle
A great way to start the journey of crowd-building is to start with those closest to you - your personal network.
This inner circle will be your most powerful tool in crowdfunding - roughly 30 percent of your campaign funding will come from them. Your inner circle are the people who know you, know your business, and often you have a direct point of contact with them.
One strategy you can take with your inner circle is to compile a spreadsheet of their contact information so that when the time to crowdfund comes, you can directly reach out to them and tell them about your campaign. Curating this list will save you time, and be a more direct and effective means of reaching out to people about your campaign.
You can also use your inner circle to expand outwards. One way to do this is to, well, cyberstalk your inner circle and see who they’re friends with. Follow these friends with your small business to get the word out more and build your network! Another way you can do this is by directly asking your network to promote your crowdfunding campaign to their networks.
Starting with the inner circle when crowd-building and crowdfunding is especially important in the crucial first few days of your campaign. You want to start out the gate strong and try and raise at least 10% of your campaign from your personal network before you begin more publicly marketing it. This will provide your campaign with credibility and encourage people outside or on the fringes of the circle to invest in your business.
How to leverage social media to build your crowd
Social media is a key tool for small business marketing, both when crowdfunding and when promoting your business on a regular basis. It helps to have several social media strategies to market your small business on hand, especially when you’re building a crowd for a future crowdfunding campaign.
Identify and seek out your target audience
The first tip of using social media to build your crowd is to determine who your target audience is. While some businesses insist, “My business is for everybody!” it actually isn’t possible to create a message that will market your business to everyone.
This is why it’s key to figure out your target audience, where they exist on social media, and how you can best craft a message that they’ll find engaging.
Bill says that your target audience is your ideal follower - the kinds of individuals who will likely follow your business and will want to contribute to your crowdfunding campaign when the time comes. So, once you find them, you want to create content that’s engaging to them and will keep your small business on their radar.
The Power of Engagement
Once you know who your target audience is, you need to find ways of engaging with them to really build a relationship with them. After all, crowdfunding is about community building as much as it is about raising money for your business.
There are many ways to boost engagement with your crowd on social media. First, you kind of have to get in their heads a bit - understand what kinds of content they’ll appreciate. Is your target audience interested in the behind-the-scenes aspect of your business? If so, Instagram stories or posts of the goings-on of your business will be engaging for them.
Also, offer up chances for your audience to interact with your business. Invite commentary on your posts, host Q&A sessions, do quizzes and giveaways. Doing so will give people a chance to interact with you beyond just a “like,” and will boost their willingness to engage with you on greater levels - such as making a sale or contributing to your crowdfunding campaign!
Bring Your Crowd to your Business with Crowdfunding!
Now that you know why it’s important to build a crowd before starting a crowdfunding campaign, you’re one step closer to success!
To learn more about the basics of crowdfunding and how to run a successful campaign, check out Crowd-Max’s catalog of resources, including their incubator program for crowdfunding small businesses.
When you’re ready, be sure to head to www.honeycombcredit.com/grow to learn more about Honeycomb’s offerings for crowdfunded small business loans, and fill the form below out for more information!