For beauty business news, beauty store owners turn to Beauty Store Business. Beauty business trends, beauty business profiles and more!
Issue link: http://beautystorebusiness.epubxp.com/i/735648
58 November 2016 | beautystorebusiness.com PREPARING FOR SUCCESS Crowdfunding companies have observed certain characteristics generally associ- ated with successful, fully-funded cam- paigns. Ryan Rutan, chief innovation officer and founding partner of Fund- able's Startups.co, shares: "Having had the privilege of observing thousands, and working directly with hundreds of campaigns per year on Fundable.com, I can state with certainty that the main drivers behind the success or failure of a campaign boil down to two specific factors: First, the development of an audience to market the campaign to prior to launch. Second, the product/market fit of the offering within the campaign." Rutan says it's critical that businesses make sure their products and offerings meet the needs of their core audience. He further notes that campaigns that fail to develop an audience prior to launch have exponentially higher failure rates. So, "those that spend the time to build and communicate with their core audi- ence enjoy significantly higher levels of success," he explains. "No amount of marketing will overcome a poor product/ market fit. If the crowd doesn't want what you're selling—failure happened before you started." Indiegogo's spokesperson concurs that building a relationship with one's audience is key to experiencing a successful cam- paign. The company notes that campaigns that fail tend to be the less compelling ones. So, it recommends that businesses take time to really share their story and share why they're using crowdfunding— authentically, transparently and with clar- ity. In addition, the successful companies tend to use a compelling, well-produced video to share their stories. While it may require time and expense, a visual presen- tation via video explaining your venture makes a greater impact than words. Suc- cessful companies also frequently give their backers updates. "Campaigns with more updates tend to raise more money," the spokesperson adds. Fail or no fail, the global crowdfund- ing industry, as a whole, raised $34.4 billion in 2015, according to Massolu- tions, Inc., which offers leading research and analysis on crowdfunding platforms. And, just to put its rapid growth in per- spective, the industry reached $16.2 bil- lion in 2014, up from $6.1 billion in 2013, underscoring its multiplied growth year by year, as reported by Massolutions. Millions of people are flocking to these sites to invest in great ideas and contrib- ute to great causes out of their pockets! This fact begs the question: Why? WHY INVESTORS CHOOSE TO PARTICIPATE IN CROWDFUNDING Crowdfunding sites give individuals an opportunity to donate money to causes or invest in ideas in which they see potential, with minimal risk or hassle. They see a need or an idea they like, and they pledge an amount that is affordable for them, even anonymously should they so choose. Furthermore, it provides the opportunity for people to feel a part of something bigger. And it gives them an opportunity to help bring to life new ideas and businesses that may increase their quality of life in some way. Often their pledge is protected by parameters set up by the crowdfunding platform. These safeguards give pledg- ers the added comfort and confidence they need to make their pledge with peace of mind. For instance, Kickstarter protects pledgers by requiring an "all or nothing process." In other words, if the project they invest in doesn't meet its goal, the pledgers receive their money back. However, if their preference is to give without expectation, they can do that as well. Indiegogo, for instance, offers flexible funding, where the com- pany chooses its funding end result. Companies can choose to keep all con- tributions, regardless of whether they meet their goal. They can also choose to have all funds returned to contributors in the event their goal isn't met. (Some companies prefer not to deal with loom- ing customer expectations when they have not received full funding.) UNIQUE BENEFITS OF CROWDFUNDING One of the most noteworthy benefits of crowdfunding for small businesses is that it allows consumers to prequalify themselves as customers and loyal fans. Other advantages include: • Crowdfunding provides flexibility and control over one's fundraising efforts. • It makes fundraising public, giving oppor- tunity for friends, family and absolute strangers to participate in the effort. • It provides the opportunity for one's fundraising campaign to reach millions of people via social media. • It allows the product or business to be tested in the market, and provides room for feedback. • It saves time and energy, since the business owner or creator doesn't have to pound the pavement, looking for potential investors and loans. THE CONS Crowdfunding cons are largely relative to the expectations and needs of the user. For instance: • Some businesses may be reluctant to use a public platform for raising capital due to the potential for public embar- rassment in the event that the goal isn't reached or the market is unresponsive. • Companies must be prepared to stay engaged with the campaign's back- ers, whether via social media, the platform itself or even as a result of media attention. • Once the funds have been raised, the company or creator has the added pressure of meeting the expectations of its backers and making good on all promises. • Crowdfunding is generally not free for businesses. There are fees and taxes that vary by crowdfunding company, as well as the potential for additional expenses. To the end, it's just a matter of deciding which pros and cons a busi- ness is willing to accept. For those who choose crowdfunding, Fredericks notes that she would include the additional step of reaching out to bloggers if she were to attempt another crowdfund- ing campaign. "These campaigns are all about word of mouth. The more people that click your campaign, the better the chances of reaching your goal. Make your story compelling! People need to feel emotionally connected to your busi- ness mission and vision statement." ■ Manyesha Batist is a freelance journalist based in Denver, CO. THE TOP 5 CROWDFUNDING SITES Of the hundreds of cro dfunding sites to choose from e bring you the top 5 most popular cro dfunding platforms that are suitable for beauty business: Beauty businesses can fund absolutely anything on this platform. The company prides itself on being a springboard for entrepreneurs and small businesses, providing a variety of features that users can take advantage of, from marketing to analytics support to logistics, manufacturing and more. This platform is mostly project-based. So if, for example, you're looking to bring a beauty product to market, it just may fit your needs. Kickstarter also provides a variety of support for success. Entrepreneurs gain access to funding from investors, customers and friends on this platform, which also offers worthy resources. Marketed as the "world's largest network of consumer and retail investors," this investment marketplace facilitates privacy during the deal and offers a host of services. This venture capital investing platform hosts many types of businesses. Specific criteria are required for acceptance.