Launching crowdfunding campaigns prematurely continues to be the single biggest reason why projects fail. Many entrepreneurs skip important steps to crowdfunding success as they are anxious to get started and to raise that much needed capital.
Crowdfunding success is a result of preparation and there are no short cuts. I cannot say this often enough: Success is decided way before a campaign is launched and nothing radical can be changed or improved after clicking that launch button.
Even well-planned campaigns aren’t a guaranteed success, but without proper planning and execution, failure rates increase dramatically.
There are many things to remember and to make your life a little easier, I have put together a list of the most important items you need to cross off your list before you are ready to launch your rewards crowdfunding campaign. Follow the steps below so you have the best chances to see your project succeed.
Crowdfunding Launch Checklist:
1. Run a Pre-Launch Campaign
If your campaign is like most others, you do not have a big enough email list to reach your goal. One of the best things you can do right away, before working on completing the rest of this list, is to launch a free pre-launch page. This service allows you to quickly and easily create a page that announces your actual crowdfunding campaign and that is designed to let people subscribe to your email list and share your pre-launch on social media. The typical duration of a pre-launch campaign is 60-90 days.
2. Legal & Taxes
Unless you are already incorporated, make sure to set up an LLC for your crowdfunding project and get a business bank account. Revenue from rewards campaigns and pre-sales of goods are taxable income so talk to your CPA. LLCs are rather simple and inexpensive to set up on sites like Legalzoom.
3. Social Media
Another thing you cannot start soon enough is to bolster is your social media presence. No matter how many or few followers you have, you’ll likely need more to reach your goal and this takes time. Tools like Twitter Marketing make it very easy to gain a highly targeted and engaged following on Twitter. This will get you between 1000-3000 new followers per month and allow you to promote your pre-campaign as your audience grows. How do you know if your social media following is strong enough to reach your crowdfunding goal?
4. Research and Picking the Right Platform
Depending on the kind of crowdfunding campaign you want to run, you have a plethora of platforms at your disposal. In most cases, Kickstarter or Indiegogo will be your safest bet.
5. Set Funding Goal
Much has been written about setting the right funding goal and yet it remains somewhat of a crystal ball science. Because every campaign and every situation is unique, you have to do your own calculations. In the most basic scenario your funding goal needs to include these things:
Cost of completing the project
+ Cost of fulfilling rewards
+ PR & marketing
+ Platform & processing fees: ~10%
+ 30% cushion
= Minimum Funding Goal
Remember that only about 2% of all crowdfunding campaigns raise more than $100k and setting a too ambitious goal can deter backers. It’s better to reach your goal in the first week and have 3 weeks left to reach stretch goals and riding the wave of being successfully funded. A much more elaborate approach to setting the right rewards price point can be found in the free ebook titled “How to set Crowdfunding Goals”
6. Set Reward Tiers
It makes sense to research the most successful campaigns similar to yours and see which rewards did better than others. According to Indiegogo, the most popular reward price point is $25.
7. Craft Your Story
Your story is the written description of your crowdfunding campaign that will be visible on your campaign page and is one of the most important elements of your campaign. In business plan terms this is your “executive summary” and should include what your project is what you need the money for and what you offer in return, as well as anything else that potential backers may need to know to be able to decide whether or not to support your campaign. Make your story at least 400-600 words and include images or renderings of prototypes as well as video to drive the message home. Have your story reviewed by complete strangers and optimize it based on their feedback until your message is clear and concise.
8. Make a Video
The campaign pitch video is without a doubt the most important marketing tool you have available. A well-made video, and I don’t mean thousands of dollars spent on fancy sound design and animations, but a video that tells your story in an engaging and genuine way is what you want. Keep your pitch under 3-4 minutes and tell the most exciting information right at the beginning to keep people watching the rest of your video. From a production standpoint, it is not important aim for a Hollywood grade production value. People know that you are strapped for cash as after all you are crowdfunding. On the contrary, spending too much time on a video may make you come across as having to make up for lack of substance with putting on a pretty show. Simply don’t insult your viewers with bad lighting and sound and you’ll be fine.
9. Secure the First 30%
This is arguably the hardest thing to accomplish but also an important constant in most successful campaigns across all platforms and verticals. Let’s circle back to #5 of this list and remember the challenge of setting the right funding goal. Let’s assume that your minimum funding goal is $50,000 which means that you need to secure $15,000 (30%) from partners, friends and family who will make their pledge as soon as your campaign goes live to give you that initial push your campaign needs to stand a chance of going viral and attracting pledges from strangers.
10. Prepare PR & Media Outreach
Media outlets, journalists, and bloggers play a pivotal role in the crowdfunding ecosystem and it is important to understand that simply running a crowdfunding campaign is no longer newsworthy. In order to get coverage for your project, it is necessary to run a crowdfunding press release and to get a media lists of highly targeted journalists and bloggers who have covered topics in your niche.