Crowdfunding offers an exciting funding alternative for businesses. Originally the domain of filmmakers, musicians and artists, crowdfunding is now used by start ups and business owners to raise capital, based on a simple notion: large amounts of money can be raised in small amounts from numerous donors via the Internet.

Here’s what you need to know about launching a successful crowdfunding campaign, including information on three platforms designed to raise business capital.

How crowdfunding works

Crowdfunding allows businesses the freedom to raise capital from investors, customers, colleagues, peers, family, friends – even strangers. Like anyone in search of funding, successful campaigns rely on a solid idea and a detailed business plan – including financial forecasts and cash flow statements – to convince potential donors it’s worthwhile to support your venture.

Typically, an established crowdfunding platform, like Kickstarter or peerbackers, is used to promote a campaign page, with incentives for donors in the form of rewards or equity. A reward might be pre-order of a new product, or services offered in exchange for funding support; equity would be a share of stock offered in exchange for capital.

Tips for launching a campaign

Crowdfunding campaigns don’t tend to go viral; they gain traction because they appeal to the people you already know – your network – as well as investors who are searching for an opportunity.

Successful business crowdfunding campaigns have these things in common:

• They tell a compelling story and convey passion for an idea, connecting like-minded people who share your vision and enthusiasm;
• They offer backers high level, time-limited rewards that include the product – and require fewer sales to achieve the fundraising goal;
• They use every means available to sell a great pitch, including detailed business plans, product images and video.

Choose the right platform

Here are three options for creating a winning business crowdfunding campaign:

• Fundable allows rewards-based and equity crowdfunding to attract backers. It costs $179 to host a campaign, which will put your venture in front of more than 23,000 registered investors.
• Indiegogo is open to anyone who wants to launch a crowdfunding campaign, small businesses included. It’s free to sign up but the company charges 5 percent platform fees on all funds raised and payment processing fees average between 3-5 percent.
• Endurance Lending Network is a little bit different than other crowdfunding platforms as its mission is to help small businesses seeking up to $500,000 of debt capital. Businesses benefit from easy access to loans at attractive rates, and investors earn good returns with secured term business loans.

Crowdfunding can be a smart, cost-effective way to get your business off the ground. It can also offer an incredible, unadvertised side-benefit: priceless feedback from your backers that can help tweak your idea before you move into production, allowing you to launch an even more successful product.

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Customers want to support companies that demonstrate a commitment to more than earning a profit. A 2010 study by Cone Marketing showed that 85 per cent of customers respond positively to companies that give to a charity they care about.

Moreover, collaborating on charitable activities encourages team building among your staff, which can improve morale and even increase productivity.

Including volunteer days in your company’s benefit package can also attract top talent and encourage staff loyalty. A 2015 study revealed that 62 percent of millennials would take a pay cut to work for a company that demonstrates a commitment to social responsibility.

Convinced giving back matters? Here are a few easy ways to become a more socially conscious company.

Implement staff volunteer days

Allowing your staff time to volunteer in the community once or twice a year is a win-win for everyone involved. Your company’s commitment to community giving can make a meaningful difference to a charitable organization while raising your company’s profile and earning the appreciation of your staff.

Host a community event

Schools, hospitals, libraries, community centers and children’s clubs can always use extra financial support. Choose which community organization you’d most like to support, keeping your company’s core values in mind – then start a campaign to raise funds for your cause. A carwash, BBQ, bake sale or fun fair can become an anticipated annual event with the help of your staff and the support of other businesses in your community.

Sponsor a donor matching program

Pledge to match donations up to a certain amount for a cause of your choice. Donor matching is a great way to inspire people to give more generously, knowing their donations will go further –and your company will be remembered for your collective generosity and goodwill. Use your company’s social media channels to spread the word about your donor matching program and encourage your followers to give to your cause.

Final tips

You’ll get a more positive response to initiating charitable efforts when you invite your staff’s involvement. Ask your employees to come up with a list of charitable initiatives that matter to them and that align with your company’s mission and values. Then take a vote on the top two or three charities you’ll work together to support that year – perhaps one local community initiative and a campaign to help a larger national charity.

Acknowledge your staff’s participation in your corporate giving projects and reward them for their personal contributions. Time off, a free t-shirt or a group draw for a gift card can go a long way to increasing participation and making your efforts to give back both rewarding and fun for everyone involved.

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