How to Set a CrowdFunding Goal

Image credit: cultivatingfoodcoops.net

Image credit: cultivatingfoodcoops.net

BY SALLY OUTLAW,In her book Cash From the Crowd, Sally Outlaw, founder and CEO of crowdfunding website peerbackers reveals the secrets of funding your business with help from colleagues, peers, family, friends and even perfect strangers through a crowdfunding campaign. In this edited excerpt, the author offers tips on deciding exactly how much money you should try to raise.

Many “successful” crowdfunding projects ultimately fail because owners realize that the funding they sought wasn’t enough to cover their expenses. These entrepreneurs may have reached, and even surpassed their goal, but they didn’t anticipate the high costs of creating or shipping their rewards. As a result, they lost money or simply couldn’t complete their reward fulfillment. When setting your goal, keep in mind that the risk of not being able to deliver to backers is more important than the risk of not hitting your goal.
You’ll need more money than you think to ensure that all the ancillary costs of executing your project are covered. When budgeting for the product you’re trying to create, keep it as simple as possible without losing the usefulness of your idea. You can then add extra features and functionalities via “stretch goals” in your campaign.

One issue on the radar at the time of this writing is the online sales tax bill, which would allow states to tax online purchases. If this bill, which has already passed the Senate, passes the House and is signed into law, those who are crowdfunding and offering pre-sales of products may have to charge and collect sales tax as a function of their crowdfunding campaigns. Keep an eye on this.

Okay, so there’s some basic math here. You’ll need to determine:

Actual, fixed cost of executing your project (whether producing a product, building a website, or renting a store front).
Costs of creating your rewards.
Costs of shipping your rewards. Don’t forget shipping supplies such as padded envelopes, boxes, bubble wrap and tape. Be sure to include an additional shipping fee in your pledge levels for international backers.
Advertising costs, such as pay-per-click or press release distribution.
Crowdfunding platform and payment processing fees, which can be 10 percent or more of your funding. Note that some websites like Indiegogo and RocketHub charge twice as much for campaigns that don’t reach their goals — 9 and 8 percent, respectively — as opposed to 4 percent if you do. Because the majority of campaigns don’t succeed, you may want to err on the high side when pre-calculating your costs.
Consider building in the costs of hiring a campaign consultant, a PR company or creatives such as designers and a video producer to help make the strongest presentation possible.

Read full article http://www.entrepreneur.com/article/228541

HEADLINE NEWS

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

NPRAfter Outcry, Crowdfunding Site Patreon Backs Off Plan To Raise FeesNPRThe popular crowdfunding service Patreon has backed off plans to change its payment structure, after widespread, vocal and passionate opposition from creators and their fans. Last week, the site announced it wou [...]

CoinDeskKickstarter ICO? Don't Count On It Says Crowdfunding Leader ...CoinDeskThe company most widely associated with crowdfunding, Brooklyn-based Kickstarter, has no plans to get into the initial coin offering (ICO) business. Coming in response to the news yesterday that compet [...]

TechCrunchHow hate speech crowdfunding outfit Hatreon crept back online ...TechCrunchIf you want to make a living creating white supremacist content, you're probably not going to do it via sites like Kickstarter and Patreon, which prohibit hate speech. Fortunately there's Ha [...]

Coindesk (press release) (blog)Crowdfunding Giant Indiegogo Opens to ICOs - CoinDeskCoindesk (press release) (blog)The startup revealed today that, through an existing partnership with MicroVentures, it will begin offering services to projects seek to use the blockchain funding model. [...]

HuffPostIs Crowdfunding Really a Good Idea for Innovation?HuffPostHere's a head-scratcher for you: according to new research, if you refer to your product or idea as both “novel” and “useful” in your crowdfunding campaign, your funding will be lower than it would if you just decl [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

FortuneWant to Hold Your Own ICO? Indiegogo Can Help You With ThatFortuneCrowdfunding sites like Kickstarter (kickstarter, +0.00%) and Indiegogo raised start-up cash for a generation of online entrepreneurs, but one increasingly visible method of internet-sourced financing seemed to h [...]

TechCrunchFormer Gawker employees are crowdfunding an effort to buy Gawker.comTechCrunchWhile Univision acquired most of Gawker Media's sites last year (and renamed them as the Gizmodo Media Group), the deal didn't include Gawker itself. In fact, BuzzFeed reported last month [...]

Boing BoingGawker alumni are crowdfunding to outbid Peter Thiel for control of ...Boing BoingGawker was bankrupted by Peter Thiel, who secretly backed Hulk Hogan's lawsuit against the network of news, entertainment and gossip sites in an act of petty revenge. Now, Gawker's a [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |