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.

The post How Crowdfunding Can Help your Business appeared first on Dudley & Associates, Chartered Professional Accountants.

Assess your debt situation

Take a detailed look at all of your debts – both current and long term. Evaluate which ones are more urgent and which can be parked until some progress is made.

The key determining factor should be the interest you’re paying on your debts. For example, those with the highest levels of interest should be paid first.

Also list your debts from smallest to largest. Maybe some of those smaller debts can be paid off quickly without much hassle to enable you to focus on the larger ones. Consider consolidating all your loans into one payment if possible.

Cut costs and free up cash

Try to cut any unnecessary costs and free up some cash in the process. Think about how much you spend on each of your daily expenses – is there room to cut some of those costs?

For example, building firm may shout takeaway coffees for its workers a few times a week. Maybe a cheaper way can be found to continue providing coffee, such as instant coffee on site with hot water from a thermos, rather than expensive takeaways.

Have a look at how long it’s taking your debtors to pay you. If your customers aren’t paying on time, come up with some solutions for encouraging them to pay quicker.

Early payment discounts could work well but make it clear on each customer’s invoice. Alternatively, tighten up invoice periods so there are less days for your debtors to pay before penalties. Make sure you let them know about any changes and the reasons for those changes.

Reassess funding

Have a look at how you’re using funds to pay off your business’s debt. Do you have funds available that could be better used to reduce debt further? Perhaps you have money in a current account that isn’t being used optimally – lowering debt and hence future payable interest could be a wiser choice.

Examine your cash cycle, when payments come in and when they go out to pay your creditors. Where does the incoming cash go before it gets allocated? Is there any you can reassign to debt payments?

Sell your assets

Another option for freeing up funds to reduce your business’s debt might be to sell some assets. What do you have money tied up in, but don’t use often enough to justify?

Any equipment that’s not being used could be sold off. One example could be a builder who has an oversupply of power tools – making a detailed list of all their tools and how frequently they’re used might reveal some surplus assets.

Make sure you’ve calculated depreciation correctly

Have you depreciated all the assets in your business that need to be depreciated? It’s important to get these figures correct including the ratio of personal to business use, if you use an asset for both.

For example, a company vehicle will need to be accurately depreciated in relation to its usage over time. We can help you calculate depreciation correctly and also check whether you’re entitled to any tax rebates.

The post Paying down debt appeared first on Dudley & Associates, Chartered Professional Accountants.