Getting a big project or business off the ground isn’t easy. There are often startup costs that can hinder your development and slow progress to a crawl. While the typical solution to this problem is to max out the credit cards, get a loan from the bank, or find a private investor or an investment group, there is an alternative that is much less risky: crowdsourcing.
What is Crowdsourcing?
If you’ve never heard of the term “crowdsourcing” before you’ll be happy to realize that it is a very simple concept. Crowdsourcing is simply the act of outsourcing to a mostly anonymous group of individuals for very little, if any compensation in return. A good example of this would be Wikipedia and other online wikis. These sites have their pages written by anonymous contributors who don’t accept payment for their work. Sounds like a pretty good deal, huh?
You may be wondering, though, why anyone would do something for no compensation in return. The answer is simple, they’re passionate about it. Someone who loves comic books may go to a comics wiki and write about their favorite characters. Someone who’s really into history may write history-based content for wikis. The list goes on and on.
You’re probably not interested in starting a wiki if you’re main focus is on funding your online business. The good news is that crowdsourcing can be applied to much more than just online written content, including getting funding for your business. This practice is known as “crowdfunding” and basically constitutes taking donations. Many organizations use this practice, from religious groups to charity funds to scientific research firms.
The only catch is that getting people to participate in crowdfunding isn’t always as easy as putting a “Donate” button on a website and waiting for the money to roll in. While this practice can be useful when you’re doing crowdfunding, you should try more aggressive techniques as well.
Give a Little, Get a lot
In most cases you’re going to have to offer some incentive if you want people to jump on board and help fund your business. One way of doing this is to offer special rewards or gifts to people who contribute a certain amount of money. You could offer free t-shirts, which are really cheap to order in bulk, free office supplies, or a unique item you create yourself.
In any event, you’re probably going to want to give away something that relates to your business. Also consider having your corporate or company logo applied to any merchandise you do give away. This is a powerful branding strategy that will help to build your brand recognition in addition to rewarding loyal donors.
Another tactic is to release a product or reward for the entire community when the amount of money received from donations reaches a certain level. Digital products such as ebooks, a video series, or an MP3 series, are ideal for this since you don’t have to worry about shipping costs, or inventor. Try creating multiple tiers with special rewards being released for each tier.
Kickstarter is perhaps the most recognized crowdfunding platform. It’s geared toward music, film, art, technology, and other creative fields, and allows users to seek funding from other users and manage their fund raising campaigns. There are plenty more, with many focusing on particular interest groups.
Dealing With the Haters
There are some people who like to refer to crowdfunding as “e-begging” and will give you hard time over it. However, don’t let this get to you. There is nothing unethical about crowdfunding and no one is forcing anyone to donate to your business. Ignore the haters, collect your money and advance your business.
A good idea to take some of the heat off of you if you’re getting a lot of negative attention from crowdsourcing is to donate a portion of the proceeds to charity. This can be an incentive to get people to donate as well as present your crowdfunding system in a more positive light. Just be sure you actually do give the money to charity that you say you’re going to. Not doing so is illegal.
Sam Mauzy is a blogger and contributing writer for Quick Sprout, a digital marketing agency.
Like this article? Please share it:
How LivePlan makes your business more successful
If you're writing a business plan, you're in luck. Online business planning software makes it easier than ever before to put together a business plan for your business.
As you'll see in a moment, LivePlan is more than just business plan software, though. It's a knowledgable guide combined with a professional designer coupled with a financial wizard. It'll help you get over the three most common business hurdles with ease.
Let's take a look at those common hurdles, and see how producing a top-notch business plan sets your business up for success.Click to continue