When is the right time to try crowdfunding for your business?
Whether you’re raising money for donations or for a loan, crowdfunding campaigns require a lot of engagement from the person running them (at least, successful ones do). For that reason, you should be hesitant about jumping into one on a whim.
But there are also times when the universe is basically shouting at you that crowdfunding is the solution to your problems, and, if you don’t know what you’re looking for, those moments can be easy to miss.
So, how do you know when it’s the right time for you to start crowdfunding? Here are just a few possible signs that it might be a good idea for you.
If you’re in a good place and looking to expand your business, then crowdfunding can help you put together a lot of the funds you’re looking for quickly. It will give you quick access to the kinds of capital that you would ordinarily need a bank or investor to obtain, and it comes at much lower risk or cost than those kinds of loan sources.
Of course, you should be sure beforehand that you have a genuinely good idea of what you’re going to do with the money once you get it. Failing to follow through on your crowdfunding promises is something that will bring a lot of bad will on your head and alienate the same community that once supported you -- not to mention that if it’s a loan you’ve crowdfunded rather than donations, you might find yourself having a difficult time paying it all back.
But if your business is in a stable enough place that you feel like expansion is a good option for you, that can be an indicator all by itself that crowdfunding is a good idea. It’s one of the fastest ways to raise funds when done correctly, and seeing how much support you get for your crowdfund can also be a good indication of how interested your community or audience is in the idea of your business getting a little bigger.
Crowdfunding can help you build a community for your brand, provided you have a particularly good campaign, but running a campaign in the first place is much easier to do when that community is already there for you.
That’s why if you find yourself in the position of already having an excellent community behind you, you should already be considering crowdfunding as an option. In many ways, the hard part has already been done. Rallying a community to your side is much easier to do when that community is already in place and willing to hear from you -- there’s a lot less convincing that needs to be done in order to get people on board.
Having that community in the first place is also a really good indication that you have something really special on your hands. It’s a testament to the strength of your idea or brand, and proof that you’re doing what your customers, community, or audience expect from you.
When you’re looking to borrow money for any purpose and all you seem to have access to are high-interest loans, trying crowdfunding is definitely worth the shot.
Whether you’re raising donations or loans, crowdfunding is always going to be a better option for you. Crowdfunded loans are typically done at much lower interest rates than other sources (often having no interest rate at all), while donations obviously don’t ever need to be paid back.
Either way, if you’re looking at taking on loans regardless, crowdfunding is always going to be the better option for you.