what are the benefits and drawbacks to crowdfunding?
TRANSCRIPT
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CrowdFunding
What are the benefits and drawbacks
to CrowdFunding?
FAQ
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The benefits to CrowdFunding are many
CrowdFunding, however, does not replace traditional methods of raising
funds but it is a new way to source funding for your idea
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1. Market Validation
In many respects CrowdFunding is a great way to test if the ‘crowd’ likes
and supports your idea
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You will be able to use the crowd
as focus groups for feedback, tap into their knowledge and advice,appeal to their circle of influence for
additional support
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You can also use the support of your ‘crowd’ as social proof to
gain more publicity attract a larger following
apply for other types of funding
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2. Limited Financial Risk
Most CrowdFunding websites do not charge you an upfront fee to profile
your campaign
Most websites charge a fee only if your campaign gets funded
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3. It is very cost effective
The creative elements of a campaign such as writing up your story,
taking photos, and creating a video require little capital outlay
but do require time
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4. You Keep Control
You do not need to compromise on any aspect of your project as you
maintain control over creative vision, costs, product delivery, marketing
and investor expectations
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5. You Retain Ownership
Excluding Equity based CrowdFunding campaigns you retain total ownership
of your idea or business
You also get to retain all the profits your idea or business makes
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6. Gain Brand Advocates
As your CrowdFunding campaign gains momentum some of your
supporters will want to be directly involved in helping you succeed
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Drawbacks to CrowdFunding
Managing a CrowdFunding campaign does require
time, effort, energy and money in order to succeed
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1. Time
You are on call 24/7 when you manage a CrowdFunding campaign
You will need lots of time to promote your campaign and answer questions
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2. Social Media
You will need to master many aspects of Social Media before you launch
Communication with your supporters needs to come directly from you
as the project creator
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3. Campaign Length
A typical campaign can require 2 months of planning, 1 month for the campaign and another for follow-up
That’s 120 days of time and effort you need to set aside to succeed
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4. Shortage of valuable information
There is a lot of top-line information about CrowdFunding online
But there are very few online resources where you can get all of your
CrowdFunding questions answered
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5. Visibilty and Privacy
To be successful at CrowdFunding you must be prepared for
full personal online exposure
You need to do this in order to build trust with your supporters
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6. CrowdFunding is not yet a household term
You will have to spend a lot of time explaining what CrowdFunding
is all about and setting expectations
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Less than 50% of CrowdFunding Campaigns succeed but
being aware of the pros and cons before you start will help you get the
results you are looking for
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There are many more resources available to support your CrowdFunding efforts at
CrowdFundingFocus.com
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CrowdFundingFOCUS