Why you Should Crowdfund your Distillery’s Growth
When you're looking to open or grow a craft distillery, you're most likely going to need some capital to fund it. While you could go to a bank or find an investor, there are several reasons why you should consider crowdfunding for your next growth project.
Crowdfunding your distillery’s growth can improve customer relationships
Forming and maintaining loyal customer relationships can be a challenge for small businesses of all kinds, but one way that you can improve upon your customer relationships is by running a crowdfunding campaign!
By asking your customers to invest in your distillery, you’re giving them an opportunity to deepen their bond with your brand. This is why we consider customers who invest in businesses to be “brand advocates.” They’re now more likely to give you their business, tell their friends about you, and do what they can to ensure your success because they’ve invested in you!
You can drum up excitement about your growth project by crowdfunding it
Crowdfunding your distillery’s growth project is an excellent way to market it to the public. If you’ve got a big move planned, like a new location or a taproom build-out, one way to let the world know about it is by funding it with a crowdfunding campaign!
Honeycomb campaigns get on average 7 press mentions and 40% more Google reviews after they run a campaign. Because investment crowdfunding is such a novel concept (it’s only been legal since 2017!), it’s likely that local press will pick up the story and get your campaign and your distillery some much-desired attention.
You can attract more funding running an investment crowdfunding campaign than a rewards campaign
You might have heard tons of stories of distilleries running lukewarm crowdfunding campaigns on sites like Kickstarter and IndieGoGo. They do everything right, but somehow can’t raise enough money with their campaign. That happened to the owner of Nippitaty Distillery, Traxler Littlejohn, who ran a Kickstarter campaign to fund his taproom buildout.
“About halfway through I noticed it wasn’t gaining any traction no matter what we put out social media-wise or post-wise,” said Traxler. “I was telling my wife, I really don’t think this is gonna work because if it was me [as a Kickstarter contributor], I wouldn’t want to give a lot because you’re not getting a lot back.”
The reason for these tepid results are because Kickstarter and IndieGoGo are rewards crowdfunding sites - there’s no real financial incentive for someone to donate to a distillery that’s trying to open up. Sure, if they’re excited about the new distillery, a person might kick a few bucks to the crowdfunding campaign, but not as much as they would if they knew they could make a return on that contribution.
This is part of the reason why Honeycomb’s success rate is 80% - compared to the crowdfunding industry average of 22%. People are going to be more interested in investing in your distillery than they would be donating to it, and you get to know that you’re going to be paying back real people, your actual customers, not some bank.
Crowdfunding grows not just your business but also your community
To that end, the cool thing about investment crowdfunding like what Honeycomb does is that it contributes to a cyclical economy around your distillery.
Think about it this way: someone invests in your distillery’s campaign, which allows you to grow and increase your revenue. You pay back that loan to the person, and they have more money now to do with as they please. Since they invested in a local small business, you can bet they’re pretty community minded, so that return on investment may well go back into the community - heck, maybe at your distillery!
This is how Honeycomb strives to build more vibrant, financially-empowered communities: by giving small businesses like you the chance to access funding for your growth, and giving regular people the opportunity become investors in small businesses.
If you’re a new distillery, a bank might not be willing to finance you
Not to end on a low note, but it can be really difficult to get a loan from a bank if you’re a new business. While the rapid growth that many small craft distilleries are seeing is a great thing, it often means that they get denied for bank loans, just because they’re a young business!
The age of your business should not be a factor in whether or not you can get a loan approved, especially if you can prove that you’re successful and growing. This is why Honeycomb’s credit analysis team looks at the full picture of every loan application that goes through, and how so often when the SBA or the bank says “no,” we very happily say “yes.”
When you’re ready to grow your distillery, crowdfunding can give you a boost!
If you’re looking for a way to finance your growth plans for your distillery that can benefit you far beyond the money in the bank, crowdfunding a small business loan with Honeycomb is a great option! Find out more about Honeycomb campaigns by filling out the form below.