Sunday, June 22, 2014

How Crowdfunding Solves Business Problems

The items below are from an article on what causes small business failures. I have repurposed it to show how crowdfunding addresses these issues and how we use these factors in evaluating potential crowdfunding campaigns.

"Inadequate Financing"

Clearly, crowdfunding addresses this issue.

"Amount of Effort Exerted: The single most important factor in determining who succeeds and who doesn't is simply the amount of effort exerted. If you aren't ready and willing to work - and work hard - being an entrepreneur is probably not for you."

While we don't believe that effort expended is the single most important factor, crowdfunding is hard. If you will not work hard on it, and work smart, then you will not do well.

"Lack of Planning: Another fact rarely considered is that the majority of new businesses fail within a few years mostly due simply to poor planning or no planning at all."

You have to plan your crowdfunding campaign. As noted above, it is hard work, but it will help in planning your overall business strategy. 

"Inability to Commit: Even though most people would like to start their own business, only a small percentage actually do it. When push comes to shove, most lack the self-confidence to make a decision and act on it. In order for the business to succeed, they must be able to gather information, weigh the facts and then make a prompt decision."

You must do all of this in creating, launching and managing a crowdfunding campaign.

"Unrealistic Expectations: Many individuals assume not only that most businesses succeed, but that they're lucrative from the get-go. This is definitely not the case."

The results of your crowdfunding campaign helps set expectations, with feedback directly from the marketplace.  

"Unwillingness to Take Responsibility: A business owner is 100 percent responsible for his or her mistakes. There's always a risk of a business failure or less-than-expected financial return. If that should happen to you, you can't blame it on someone else."

Same thing with a crowdfunding campaign. It's all you, even if you have a team or consultants. 

Summary

We reject many potential crowdfunders because they are not willing to work hard, have unrealistic expectations, cannot fully commit to the campaign (and the time/effort it will take), have not done the planning, are unwilling to do the planning, and seem like they are looking for someone to pin the blame on if they fail. Our answer: Thank you, but, not us.

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