No money? Let crowdfunding be your solution to funding your e-commerce shop
Some of the most successful entrepreneurs in the world didn’t have a dime to their name to start their business. So how did they become so successful? Well, some of them hustled their fingers to the bone while others went into debt to get started, but in the end, they came out on top.
That just goes to show you that starting your online store with no money might seem like a far-fetched dream but it’s very achievable… Just think about it, the phrase “making something out of nothing” didn’t just come out of nowhere.
Look at Sam Walton, the founder of Walmart. When he was in the first phase of trying to get Wal-Mart off the ground, he didn’t have a dime to his name. He had to resort to asking his father-in-law to front him $25,000 to purchase the store but once the first Wal-Mart opened in 1962, it was an immediate success in the retail industry. Ironically, the store is criticised for underpaying its employees when the very founder didn’t have any money to buy the store in the first place.
But even in today’s day and age, aspiring entrepreneurs still need financial help to get their businesses off the ground. Some have journeys more treacherous than others but lack of funds is no longer an excuse to not start your own business, especially in the world of e-commerce.
One of the biggest ways that lots of e-commerce businesses are getting funded is by way of crowdfunding. Companies like Fingopay have benefited greatly from crowdfunding. They had a financial target of £750,000 and with the use of crowdfunding, the company was able to hit its goal.
Crowdfunding in history
Let’s face it, crowdfunding isn’t this new fad that businesses are just now discovering if you think about it. You can go as far back as 1885 with the assembling of the Statue of Liberty’s pedestal. According to the BBC, the iconic statue was shipped from France but the building of the pedestal was delayed due to not having enough money to build it. Thanks to newspaper campaigns and donations from hundreds of residents that lived in the area, the pedestal was eventually built.
So what is crowdfunding?
Crowdfunding is a method of collectively raising capital through family, friends, investors, etc. Typically with crowdfunding, there are three primary types of crowdfunding. The three types are donation-based crowdfunding, equity-based crowdfunding, and rewards-based crowdfunding. Here’s a little bit about each one:
● Donation-based crowdfunding: Donation-based crowdfunding is a campaign where the investors or contributors receive no financial return.
● Rewards-based crowdfunding: This is a campaign where individuals will contribute to your business in exchange for some type of “reward.” The reward is typically the product or services your business offers. This is a popular campaign for investors or contributors because they’re not investing and completely leaving empty-handed.
● Equity-based crowdfunding: This crowdfunding campaign is completely different than the previous two campaigns. With equity-based crowdfunding, the individuals who invest in your company exchange their capital for shares in equity. In this campaign, your investors will receive a financial ROI as well as a share in profits.
How to get your e-commerce business funded with crowdfunding
Choose the right platform
When utilising crowdfunding as a method of funding your e-commerce business, you’ll quickly see that there are several platforms out there that you can choose from to set up your crowdfunding campaign on but the two platforms Peerbackers and Fundable are specifically geared towards businesses and entrepreneurs. Just read the platform’s guidelines to make sure you meet the specific guidelines for your campaign.
In addition to choosing the right platform, it’s also a good idea to create your e-commerce site before you pitch your crowdfunding campaign. Sounds like common sense but some entrepreneurs have waited to create their e-commerce business after their campaign ended and found it more difficult to transition their site after their campaign has ended.
There are some great options for creating your online store. Being that you’re using crowdfunding as the method to fund your business, you need to create a “brand” feeling. Finding the right domain name and building a great site are important, but they are only the first steps. People like to work with other people.
Tell your story
When it comes to getting investors and contributors to fund your business, they’re going to need a reason to invest. This is why you need to share your story to get them interested and telling your story is the most effective way to get their attention. It’s easy to tell your investors all the great benefits of your product but one of the best ways to make people want to invest in your business is to pitch your product to them around the particular problem or issue your product solves.
You’ll need to brainstorm how you can tell your story and the need for your product. Do you know the best way to do this? The best way to do this is by way of video. Your video needs to showcase what your product does and give people a clear understanding of how it will make a difference in the world and that their donations will put your business one step closer to achieving that goal.
Promote your campaign
With crowdfunding, simply telling people about your efforts won’t be enough. You’re going to need to put in a decent amount of time and effort to promote your campaign and get the word out. Most of the time, you’re going to want to reach out to family and friends first and then take it to social media.
Create business pages for social media platforms that you often use with a link to your campaign to donate as well as a link to your e-commerce site. The goal is to make sure that your campaign reaches the masses to get as many people to see your story and donate. Most of the time, people will donate if it’s for a good cause or if they see that it’s truly beneficial.