From Campaign to Business
Remember, the point of a crowdfunding campaign for products is to get the capital that you’d not otherwise get as from your existing network. Don’t keep your eyes off the goal, which is to build an enduring business.
Think of the crowdfunding campaign as a wedding: you’d like for it to be spectacular, but what’s important is what happens in the long term.
Recall from the previous chapter that you have a host of advantages when you’ve run a successful crowdfunding campaign: you’ve proven market demand, you’ve connected with active supporters, and you have the funds to start a real business.
The following few pieces of advice are offered by merchants who have already experienced success.
Build your site before your campaign closes
One of the best things for you to do is to build a site before your campaign closes. It’s so important that we’ve decided to make it its own chapter. You can find it immediately after this section.
Keep in touch with your funders
Crowdfunding are useful for a great deal of reasons. One of the most important is the aspects of marketing: First, you get attention in the crowdfunding community; second, your funders can turn into an early community of customers and supporters.
You have to be very grateful to your funders. And that means trying to fulfill on time and being transparent with delays. If you have the time, try to thank backers individually. “It’s worked for Hickies to thank every single one of our backers. We’re grateful for their support,” says Collin Willardson of Hickies.
Most businesses don’t have a community of supporters who have already proved that they’re behind your product. Make sure to engage with them. Give them frequent updates; make them be the first to know about your new products; surprise them with special notes or maybe even something more extravagant, like a commemorative t-shirt if you have money left over.
Figure out cashflow early on
Say you reach your goal of $50,000 in funding, which you’ve calculated to be sufficient initial capital investment to manufacture your product, obtain the supplies, and fulfill all orders.
You should also consider how to keep up a source of cashflow. Remember, your product doesn’t end at the campaign. Once you receive a big lump of cash to build the product, you have to be thinking ahead to how to perpetuate a source of income.
In fact, cashflow is so important that both Catan Boards and NOMAD had to rely on early sales to manufacture their product. Even though they surpassed their fundraising goals by respectively $336,000 and $111,000, both businesses had so underestimated their costs of production that they had to rely on cashflow to actually manufacture their products. If it wasn’t for early sales, they would have had a lot more difficulty manufacturing their products.
The best way to generate cashflow? Building an independent site. See the next chapter.
Shipping and fulfillment
Even though many of your funders are genuinely supportive of giving money to help an idea, most would be disappointed or angry if nothing ever came out of it. Delivering the product they pledged for is an important part of keeping them happy.
Shipping and fulfilment is difficult, and a lot of creators fail to properly think about this area.
Bill Tramel of Catan Boards says that shipping is really important to figure out shipping. “Whenever someone asks me about crowdfunding, I advise them to figure out shipping,” he says. “Not just shipping in the States; shipping everywhere.”
He offers an example: “One of our aluminum boards cost about $300 to ship to Singapore. And the pledge was something like $285.”
Make sure to budget for shipping in your rewards, and then figure out whether your funding request still makes sense.
Also, make sure that you have a system for fulfilling your pledges. It’s not hard to run into a thousand orders that you have to fill. Either figure out a good way to do everything well yourself, or use a service like Shipwire to ship your goods to funders.
Get an accountant
To Bill Trammel of Catan Boards, finding an accountant is crucial. “Try to find one with startup experience,” Bill advises. “Our accountant has saved us so much money.”
Don’t underestimate the importance of figuring out how to manage your income and expenses. This is especially true if you’re not familiar with financial concepts. A good accountant knows the tricks of deferring certain taxes and expenses given your situation. Most people won’t ever come into a great deal of money all at once. Don’t make unnecessary expenditures because you’re not familiar with the rules of finance.
Figure out budgeting
When you’re running a campaign, always keep the long term in mind. If adding a piece of capital equipment makes you a more durable business, revise your funding goals and ask for it. It’s better to do it then than to not ask for it at all and risk failure on delivering your goods. While you can’t expect to raise exorbitant sums, you shouldn’t be timid about asking for all the expenses you might need around the product. Budget carefully, and tell your supporters what you’ll do with their money. It’s better to fail at not hitting your goal than to take everyone’s money and not deliver a product.
Always think about the long term in everything you do.