For over a decade now, crowdfunding has been an extremely popular way to fund startups, projects, and other endeavors if you lack the funds to get off the ground. However, there are things to watch out for; pitfalls that people who use crowdfunding often find themselves walking right into.
Here are three common crowdfunding mistakes that you should keep in mind.
It can be tempting to set your crowdfunding goal a bit higher than you need it to be. There may be hidden costs that you do not expect, especially if this is your first time doing something like this. It would be nice to have a bit of a safety net to make sure that you can cover all your costs.
On the other hand, the higher your goal, the harder it will be to reach, and failing to hit that goal is bad for a few reasons. One, some crowdfunding platforms only let you keep the money if you make it all the way to your goal, so by setting that goal too high and not reaching it, you have lost everything.
Secondly, even if you do get to keep what money you raised, a failed crowdfunding campaign looks bad and could negatively impact any future endeavors.
When you launch a crowdfunding campaign, you are asking people to put up their hard-earned money for something that does not even exist yet. It can be easy to view the campaign as a simple formality, thinking that the hard work comes after you get the money.
Yes, after you get the money there will be plenty of hard work, but you need to put in work upfront too. The campaign needs to not only inspire confidence in your investors, but also give them a clear idea of what they are investing in. This means videos and images along with well-written copy that thoroughly explains your ideas and plans. Treat your crowdfunding campaign like it is the actual product launch.
Rewards play a big part in whether a crowdfunding campaign is successful. Remember, these are not traditional investors. They are not making any money off your product, even if it sells like hotcakes. They want incentive and that comes in the form of rewards.
We have all seen the structure: the more money you invest, the bigger the reward. Sometimes, though, the different reward tiers can get needlessly complicated. Keep your rewards simple, straightforward, and easy to fulfill on your part. There is no shortage of crowdfunding horror stories in which backers did not get the rewards they were promised. This is not always the result of a scam (though sometimes it is), but usually a small startup promising more than they can deliver. Their intentions are good, but being new to the game, they bite off more than they can chew.
Offering simple rewards means that your backers do not have to agonize over which rewards to choose and it ensures that you will be able to fulfill your end of the deal.