4 Top Reasons to Use Crowdfunding to Launch Your Business
In the age of social media, there are countless possibilities to harness the potential of digitally connecting with people to launch a business. Traditionally, if you have an idea for a product and you are looking to raise funds, you’ll need to go to a bank for capital. Nowadays, you can source funds through social media channels and crowdfunding sites.
But even if crowdfunding is popular, it doesn’t always mean that every attempt is successful. Many start-ups end up failing because they lack the following three key points to success:
1.Your product has potential.
2.You use an established crowd sourcing site like Locodor.com with complete resources.
3.You have money to invest in advertisements.
By definition, crowdfunding means using an extensive network of people to raise funds. Here is why it is an effective way to launch a new product.
Immediate access to a marketplace to attract customers
There is not just one crowdfunding site you can use to raise funds for your product. There are many out there with a host of potential customers for your product. Another benefit of using a crowdfunding site is that the platform will also help promote your business. Since you are already connected to thousands of users, there is also a high chance that these users will share your product with their friends on other social media channels.
Customer feedback helps improve your product
Before launching your product to a mass market, you can use a crowdfunding site to get valuable feedback from your target customers. Many businesses which have used crowdfunding to gain success used data gathered from the site to improve the product and meet the needs of their target market.
Minimize risks and raise revenue margins
One excellent feature of using a crowdfunding site to promote a product is that you can pre-sell your item within a period of 30 to 60 days. When you have confirmed a large volume of orders, you can get discounted prices from the manufacturer which means you will have higher profit. This model also reduces your risk because pre-selling means you don’t have to work too hard to meet a set inventory. Once you have a product prototype and a solid marketing plan, you can set things in motion through a crowdfunding site.
You are in a better position to get more prominent business deals
Success on a crowdfunding site opens doors to many possibilities. Upon proving that there is a high demand for your product, you will have better chances of closing large deals with suppliers and manufacturers. You can also close deals with retailers and get a license or patent for your product much faster. Some businesses that began through crowdfunding sites also had success in selling their company to potential investors. In many ways, opening doors through crowdfunding gives you more flexibility to make decisions for your company and choose the direction you wish to go in. Whether you plan on selling your business after gaining success, or branching out to other ventures, crowdfunding is always an excellent starting point.