5 Advantages of Crowdfunding for Businesses

5 Advantages of Crowdfunding for Businesses

5 Advantages of Crowdfunding for Businesses

Traditional fundraising methods can seem like an insurmountable wall to the entrepreneur or small businessperson who lacks the initial capital to get things started. Gatekeepers often stand in the way of accredited investors and substantial loans. It’s no surprise, then, that so many are flocking to the best alternative: online crowdfunding. Platforms like Kickstarter have been instrumental to the success of many entrepreneurs in need of funding and exposure. There are several compelling reasons to use crowdfunding for businesses, which we will detail below.

The Process is Streamlined

Hunting down investors using traditional methods takes time and energy that many entrepreneurs simply don’t have when they’re first starting out. Trying to secure bank loans and seeking out accredited investors costs precious effort that could be going into getting your business off the ground. Crowdfunding offers a simpler, more efficient and streamlined process. Once you’ve selected your platform, you’ll be able to get your message out, offer rewards, and more through one centralized location. Potential contributors will be able to use your crowdfunding platform to easily find you as well.

Credibility Leads to More Credibility

When an individual comes across a new product or service, they’ll feel more confident about trying it out if they see others using and enjoying it successfully. This is the core concept behind social proof: that your business and product or service can gain credibility just by showing that you have an audience that believes in you and what you have to offer. While it’s not absolute evidence that your campaign is viable or will succeed (see Theranos), it’s a powerful tool for proving viability and attracting more attention.

It Serves as a World-Wide Focus Group

Crowdsourcing breaks down the barriers between you and your audience. This makes it easier for you to reach out to them, but it also makes it easier for them to respond with their own feedback. Criticism is never the easiest thing to take, no matter how constructive it might be. But you must take this criticism into account and turn it to your advantage. Try to think of it as a gigantic focus group. Your backers might be able to spot flaws in your business plan that you were blind to. Ignoring those flaws won’t make them go away – it just means that they will hurt that much more come launch time.

It Shows You Who Your True Believers Are

You will need allies in your fight for fundraising. Few will be as loyal or as impactful as those who get in at the ground floor. They believe in the viability and promise of your campaign. The best of them will spread the word around within their own personal networks, leading to more growth and momentum. Even after your product has been launched or your business has been formed, this is the group that you will come to time and time again for support, both financially and emotionally.

It Can Harness the Power of Media Exposure

Crowdfunding for businesses isn’t just for financing. It’s also a potent marketing tool that, if done right, can also bring in media exposure. Successful and promising startup campaigns are often popular news stories in the business and tech world. Whether it’s an old media publication like a local newspaper or a new media story shared through Twitter, this can put you on the fast track to reaching people outside your chosen target audience, or who you might have been unable to reach in the first place.

Convinced that crowdfunding is right for you? Then the next step is to decide on what kind of crowdfunding to go with. Don’t worry — we’ve got you covered here.

Looking to start a business or grow your current business? Contact FL Patel Law today by visiting our website or calling 727-279-5037.

About Us

FL Patel Law PLLC is a boutique business law firm dedicated to entrepreneurs and companies.

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