Crowdfunding is still a new event in social media and is not fully studied. It opens new opportunities for consumers and businesses. Today I want to talk more about benefits of the crowdfunding for small business and in particular for innovative startups.
Crowdfunding is a great opportunity for the small business. If you are an owner of a small business company with a great idea but lack venture capital, crowdfunding can be a way out for you. You can share your idea with consumers and if they like it you will be able to collect funds to start production. But this is not all yet. The most interesting thing is that besides fundraising crowdfunding performs three important marketing functions.
First of all, it is a great research tool. By estimating how many people backed your project as well as just 'liked' it in Facebook or visited your web page you can evaluate potential demand for your ideas. As a benchmark, you can compare your results with results of similar projects in your field.
Crowdfunding is also a great promotion tool. People searching for projects to back up will read about your products not even thinking that they read texts that also perform advertising function.
Last one but not the least benefit of crowdfunding is that it is also a marketing channel as you can reward your backers with first samples of products. In this case you will not have intermediaries except for crowdfunding site.
An illustration for what I just described is a bamboo watches project launched by a small startup NFNT at Kickstarter. The project initial purpose was to fundraise 11,000 dollars. As a reward for any gift that is equal to or more than 55 dollars the project creators offered bamboo watches. By end of the project it has collected 101,607 dollars. The project was backed by 1,185 people and 1,067 people 'liked' it in Facebook. In the end of the day this company not only fundraised money for their project but also sold more than 1130 units of their product.
Thus, if you want to launch something innovative but you are not sure whether your idea is cool enough you can try it first with crowdfunding community and if they like your idea you can start develop it in full swing.