Until recently, any business idea would have to be entirely self-funded it were ever to actually be executed.
Whether it were taking out a loan coupled with hefty interest fees or simply giving the idea to somebody with more money that could actually make it happen, trying to set up a business was previously incredibly difficult.
Until crowdfunding came about.
So here’s our ultimate guide to making money from Kickstarter…
What Is Kickstarter?
Crowdfunding is, essentially, a way of allowing internet users to give you money to help you with whatever it is you need help with.
It’s been used to raise money for charities, raise money for projects and even as a way for friends and family to give some of their cash to others to help them travel the world/pay for surgery.
Why Does Crowdfunding Work?
It’s not necessary anymore for newbie companies to spend crazy amounts of money on manufacturing products or renting out storage space.
With crowdfunding, all businesses need to do is have proof that they actually have a plan for their product (and aren’t just leeching off of people’s good-will under some false pretense) and they can receive funding to support it.
Kickstarter, to reference the title, is perhaps the most well-known and well-trusted crowdfunding platform – as is GoFundMe.
Why Is Kickstarter Ideal For Entrepreneurs?
A starting-out business or independent entrepreneur only needs to have an existing prototype or other proof of their products’ plans that they can post to one of these sites.
Visitors are then able to help to fund the product, if they so wish.
Crowdfunding is, in essence, a smaller representation of the stock market.
Visitors that decide to help fund the product may also receive benefits such as access to exclusive products that, without their help, would never have reached the market.
Investing in a product that you really want to exist and contributing to its creation gives you the benefit of purchasing and using it, rather than simply hoping for it to be invented some time in the future.
And, even if visitors invest in an idea that never actually comes to exist through lack of sufficient funding, they’ll get their money back. More often than not, however, projects do receive enough funding and businesses are able to go ahead with their ideas.
So how can you make money with Kickstarter?
Don’t Fake Anything
Kickstarter puts a very strong emphasis on honesty and loyalty to backers.
You’re going to be required to keep in touch with the backers of your business, letting them know how the product is coming along, when it’ll be available etc.
It therefore isn’t at all feasible to lie to your backers because they’re going to find out if you’re not being honest.
You shouldn’t come up with any fake design plans in the hope to attract backers, nor should you be dishonest about the progress of your product.
If your project is successfully funded, you take on full responsibility to stick to your promises and keep your backers in the loop.
If you aren’t ready for this responsibility or could do with some more time to prepare, you shouldn’t open a crowdfunding scheme just yet.
Take Care When Choosing Your Goals
You need to take care when deciding on your funding goals.
It’s may seem wise to overestimate how much money you’re going to need to get started.
If you underestimate this, you may find that you don’t have enough money to complete the project and fulfil the promises you made your backers in the first place, putting you at a huge and very stressful disadvantage.
However, if you massively overestimate your goals in Kickstarter, people will probably get the wrong ideas and assume that you’re doing so in order to have some money to put aside for yourself.
It is important to decide on an accurate and representative goal that covers your expenses whilst still giving you some wiggle-room.
If you can, aim to set your goals as low as you can – without putting yourself at a disadvantage but whilst still keeping realistic.
The chances are, your Kickstarter funding will exceed the amount that you put it up for anyway and you’ll easily cover the funding you need.
Don’t Neglect Marketing
It’s vital that you don’t start marketing your project at the very last minute.
If you keep trickling your funds into marketing as your project grows and expands, you’ll save a lot of time and money further down the line.
You won’t then be forced to pump in thousands of pounds per day on Facebook ads and instead will be sitting on top of a slowly-generated and dedicated audience that have watched the product grow.
Reward Your Investors
Kickstarter also allows you to offer increasing levels of rewards to backers. For instance, a backer of £5 may receive a free product, while a backer of £50 may receive a whole range of free products and exclusive access to an online members area.
These rewards should always relate to the project and, where possible, to the things that each backer’s contribution made possible.
Offering free products or insider information shows backers exactly what they helped you to create, making them feel like they’re a part of journey (which, really, they are.)
These rewards should be representative of the price they demand.
It’s no good offering very low-end rewards to backers for high prices – the amount that they donate should be rewarded appropriately.
Keep Backers Updates
It’s very important to offer updates to your backers throughout the journey that your project takes.
It’s also a essential in keeping investors interested in your work, not simply abandoning it after receiving their reward.
Updates let visitors know that you are dedicated both to the project and its backers and those that are already backing the project may be compelled to invest more money into it, or to encourage people they know to join.
Backers will want to know exactly how you’re spending their money and when they’ll be able to see the finished product and so it’s key to keep them updated along your journey, including all of your successes as well as your failures.
It’s also vital that you promote your project absolutely everywhere possible.
Receiving enough money to make an idea work is only the beginning – once your crowdfunding bill has passed, it’s down to you to make it work.
Thus, you need to spread the word through every platform at your fingertips.
Do this by adding information to your websites about the crowdfunding project, by telling your Facebook friends about your project you begin not only to increase your chances of receiving sufficient funds to get it going, but also the attention that your project will attract once it’s up and running.
Make sure also to talk to people you know in person, letting your family and friends know about the project.
You’d be surprised at how many people will take an interest in it, and further surprised at the people that decide to fund it.
People appreciate appreciation. If you do something nice for another person, it’s always nice to be thanked for your deed.
Thus, you need to show your backers as much appreciation as the deserve. It is them that have so generously helped you to make a reality out of your dream business idea, so thank them!
You can do this by shouting them out on Twitter, sending them personal Facebook messages of thanks, or even sending thank you letters to big contributors of your project.
Don’t skip out on this step.
Understand That You’re Not Making Money From Kickstarter, But With It
Kickstarter isn’t the platform that’s going to be earning you money.
Yes, you’ll receive an initial lump sum should your crowdfunding campaign succeed, but thereafter you’re going to be earning money through whatever it is you were funded for.
The funding part is only the start and it’s, as the title suggests, a kickstarter in helping you to make that idea a reality.
Once you’ve got the funds you need, you need to invest yourself fully to whatever it is you needed funding for.
If it’s a business, dedicate all you have into making it succeed – into marketing, appearance, social media, SEO – everything you can think of.
Factor all of this into your goal before setting up your Kickstarter campaign and you’ll be sure to have all of the funding you need.
And, on that note, don’t waste any extra funding you may receive.
Don’t splash out on a holiday with that excess £5,000 – use it wisely!
Invest any extra cash back into the business, or into marketing, or into whatever it is you decide will boost the longevity and prosperity of it.