Top 5 Benefits of Crowdfunding for your Small Business - Besides Raising Money
Updated: Apr 22, 2022
If you’re looking into crowdfunding, you’re probably doing it for one major reason: to raise the capital you need. Crowdfunding is a great way of unlocking the funding you need for growth that otherwise might be difficult to attain. Instead of relying on a bank or scrimping and saving for years, you can use your community connections to reach your next step.
But, did you know that there are many benefits to crowdfunding that go beyond the money in your bank account?
By using a Honeycomb crowdfunding campaign as a growth tool for your business, you can strengthen your customer and community relationships, generate marketing buzz for your business, increase your revenue, and unlock opportunities for collaboration in your neighborhood!
It’s more than just a small business loan
With a Honeycomb Credit crowdfunded small business loan, you get so much more than just the capital you need to grow your business. Whether it’s a network of community partners, collaborators, and customers or the tools you need to rocket ahead in growth, Honeycomb loans come with so much more to offer.
Learn more about Honeycomb Credit small business loans at www.honeycombcredit.com/grow and fill out the form below for more information!
Watch: The Top 5 Benefits of Crowdfunding
Without further ado, here are the top 5 benefits of crowdfunding a small business loan with Honeycomb Credit, besides just raising the money:
Crowdfunding turns your customers into brand advocates
When you choose to crowdfund to get the capital you need for your business’s growth, your relationship with your customers changes into a purely transactional one into a deeper partnership.
Not only are your customers buying your product, but they’re also investing their own money into your business. On your end, you’re not just selling them a product, you’re also paying them back with your loan.
If a customer invests in your business, they’re not only more likely to continue to give you their business but are also more likely to tell their social network about your business. Why? Because now they have a stake in your success!
We call this new kind of customer a “brand advocate” because their relationship with you goes beyond just buying your product or service - it shows they’re a superfan and are interested in your success. It also is a very valuable tool in your business’s growth.
Small business owners like Chad Townsend, co-owner of Millie’s Homemade Ice Cream in Pittsburgh, have been able to form meaningful relationships with customers as a result of their Honeycomb campaign.
“I would say at least once a week, we have someone who comes up to us and says, ‘Oh hey, I’d like to meet you, I invested through Honeycomb,’” says Chad. “We’ve made some friends. It’s been really interesting, it’s definitely shown to be a community and network.”
Millie’s Homemade Ice Cream raised $50,000 to purchase a new ice cream truck, bringing their delicious ice cream to the road!
Crowdfunding strengthens your relationship with the community
Your business already makes an impact on your community just by existing. You provide goods, services, and experiences your customers can’t get anywhere else, whether you’re an independent craft brewery, a soap shop, or a yoga studio.
How can a crowdfunding campaign possibly make that relationship stronger? By allowing your neighbors, customers, and biggest fans the opportunity to invest in your business, you bring them into a much deeper kind of relationship than just a transactional one.
Also, you’ve got the potential to help your community build upon their own individual financial goals by paying them back through your Honeycomb Credit small business loan. That not only leads to a strong relationship but also helps build a more vibrant, financially empowered community.
“I don't like to ask for money,” says Jeanne Herbert, co-owner of My Goodness Market in Pittsburgh. “So [the Honeycomb campaign] was really great because we could say, ‘We're giving you an opportunity to help us grow, and you can actually have a good investment that you feel good about.’”
My Goodness raised $35,000 in 36 hours to help equip their neighborhood market with new refrigeration units. This will help them continue their mission of providing the neighborhood with local, sustainably sourced food!
Crowdfunding generates marketing buzz for your business
Another added benefit of crowdfunding with Honeycomb is that it generates marketing buzz for your business. It does this in several different ways:
First, by creating a campaign page—which includes a professionally shot video, detailed story of you, your business, and your campaign, and all the little details about the financials - you have a chance to really tell your business’ story in a way that’s totally unique to other mediums.
Second, we will boost your campaign on our own social media, introducing your campaign to your network of thousands of investors. This is a great way to market your business to a national network of community-minded investors!
Thirdly, we offer the chance to do a pitch event for your campaign, allowing you to speak about the campaign in your own words and interact directly with interested investors.
Finally, Honeycomb campaigns receive on average 7 press mentions! This is a double whammy, because it can not only market your business to the public, but also your campaign, and possibly compel people to invest in your campaign.
This marketing buzz was especially important to Kylie Primus, owner of Games Unlimited in Pittsburgh. Games Unlimited was struggling because the coronavirus pandemic caused them to temporarily close and furlough employees. They were able to raise $23,935 to keep them running during that difficult time.
“We have gotten so many emails from customers since the program went live, which has further increased our ability to engage with them, a form of marketing that is critical when the storefront itself is closed,” he notes.
Crowdfunding can lead to revenue growth
The winning combination of increased customer support, an infusion of capital, and marketing buzz leads to better business for those who crowdfund through Honeycomb. By increasing your business’s potential with your growth project, you’d expect some revenue growth, but Honeycomb helps give that growth a turbo boost.
On average, businesses that have crowdfunded through Honeycomb have seen a 60% increase in revenue in a year after their campaign closed. That’s right: 60%.
For example, The Pittsburgh Pickle Company was able to begin co-packing, increasing their production and distribution potential with the help of their small business loan from Honeycomb. They raised $50,000 to buy new pickling equipment to get them set up for co-packing.
Will Patterson, co-owner of Pittsburgh Pickle Company, says, “The funding really allowed us to pull the trigger. I don’t know if we would’ve ever done co-packing without the loan, and now, co-packing could represent a very significant portion of our revenue stream.”
Crowdfunding connects you to a network of potential collaborators
Speaking of the Pittsburgh Pickle Company, interestingly enough they were able to use the co-packing capacity made possible by their Honeycomb campaign to help out 2 other Honeycomb alumni! They began co-packing with Batch artisanal jam and created a new product with 5 Generation Bakers—the Cinna-Pickle.
This is just one example of how Honeycomb Credit is more than just a crowdfunding platform— it brings in a social networking element as well! There are so many anecdotes out there of small business owners who have connected through Honeycomb to offer retail space, collaborate on a pop-up, or make something beautifully weird together like that cinnamon pickle.
“Being associated with other small businesses, as well as Honeycomb itself, expands your profile to other people,” says Luke Cypher, owner of Blue Sparrow Food Truck. “I think that's always going to be a benefit, as being a part of something makes you a part of something bigger.”
Blue Sparrow is a hugely popular food truck in Pittsburgh, and when Luke was looking to raise money to purchase a retrofitted Greyhound Bus to expand his food truck fleet, he raised $10,400 from 13 investors to make it happen.
Instead of getting a small business loan from a bank, you could unlock the capital you need while also gaining a whole network of people to collaborate with through the Honeycomb alumni community. How’s that for an added benefit?