How Entrepreneurs Use Crowdfunding to Launch a Business

crowdfunding to launch a business

crowdfunding to launch a businessAs money has tightened up in the bank loan arenas, small startup businesses have faced an increasing hurdle of where to get initial capital. The popularity of crowdfunding to launch a business has allowed individuals to invest and give entrepreneurs the chance to be successful. By using crowdsourced funds instead of a loan, startups face fewer penalties if the business fails.

Detailed Business Plan

While crowdsourcing platforms themselves are simple, encouraging individuals to invest takes some work. Entrepreneurs still need a thorough and comprehensive business plan to prove they are savvy enough to use the raised funds wisely. This plan should include aspects like the problem and proposed solution, budgeting and other necessary aspects, with an abbreviated version topping the crowdsourcing page.

Zack Miller, head of the investor community at OurCrowd funding portal, stated, “The real Holy Grail of crowdfunding is not just an efficient way to raise capital for your business. Done right, equity crowdfunding enlists an army of interested, smart and experienced investors who are incentivized to support the success of your company. They want to make introductions for partnerships and new hires. They want to help internationalize your business.” The entrepreneur’s main focus should be in having a firm business plan, a winning product and a great marketing strategy prior to the crowdfunding launch.

Reduce Overhead Costs

Startup business funding can begin by encouraging immediate sales generation through the use of a day office rental. This reduces the overall costs involved in permanent site rentals or purchases, while still providing a setting for important meetings with potential clients and vendor partners. Utilizing services and options that demonstrate cost savings is an attraction to investors. Entrepreneurs who clearly show they care more about their bottom line than having a flashy office are an attractive prospect for crowdfunding participants.

Build Vendor Relationships

Having a lineup of vendors for your new product or service is another major attraction for potential investors. It shows that the entrepreneur has performed diligent research into the field and is ready to deliver when their campaign has been funded. Moreover, it demonstrates that the entrepreneur is not simply starting their business on a whim. They are seriously devoted to the success of the company and have a plan for every penny that is invested.

Rich Rodman, CEO and co-founder of regulatory compliance tool provider Crowdentials, elaborated on the topic, saying, “Find a service provider you trust. Look across all verticals to find providers, and do your due diligence as to which one you want to go with. As a company raising capital, you want to focus on attracting investors and outsource the compliance aspect. For this reason, going with a third-party service provider is very wise.”

Crowdfunding has opened the doors to small business and entrepreneurial freedoms that were never before experienced. The chance to launch a business without the overpriced assistance of a bank is now taken beyond the world of fantasy and has become reality. With the right plan and strategies in place, crowdfunding can attract the investors that are needed to turn a bright idea into a successful business.

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Are you looking for the perfect office space for your new company. Advantage Office Suites, the leader in startup office space in Scottsdale, can help with many options including virtual offices, flex-suites and executive office suites. Call Advantage Office Suites today at (480) 305-2000 for more information or click here to request a quick quote

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