If you are a social entrepreneur with ICT skills, and you want to start a viable trade, one of the most profitable social businesses you should consider venturing in is launching a crowdfunding website.
A crowdfunding website is a platform where people from all over the world raise funds for charity, personal or business projects via the internet. It is a social enterprise that an entrepreneur can start without needing ample office space or colossal capital.
Crowdfunding is on the rise and is not only significantly affecting the way businesses raise money, but also consumer’s expenditure. Crowdfunding is also bringing together like-minded entrepreneurs for various events because the collaborative financing system creates a social community from the internet.
Web-users also get a chance to invest in companies and projects that interest them. The trade has helped to finance education, support athletes, and has played primary roles in various donations.
With the technology available today, it’s easier than ever before to create a crowdfunding website. Here is a step by step guide on how to start a crowdfunding website and have it running fast.
Establish a Crowdfunding Niche
Every new crowdfunding platform is unique and should have a dedicated niche. The website should host campaigns to raise funds for a specific cause or type of product. This is because there already exist big platforms from Crowdfunding creators, and you’ll most likely lose if you try to compete against them.
The popular crowdfunding platforms people know today took years to developed have experienced campaign creators, high traffic of site visits, and donors. To make your crowdfunding platform successful, you need to find a particular niche that has not yet started in the crowdfunding industry.
Choosing a unique field for your crowdfunding business helps separate your website from others, and also returns value to your campaign backers and organizers. Finding your niche rewards campaign creators with the benefit of gaining more recognition from other users that support the platform within a short period. It is a fantastic way to find great project backers.
How to Start a Crowdfunding Website Using Crowdfunding Technology
When it comes to running a successful website for your crowdfunding platform, you need to find the right technology. It is one of the vital steps in determining how to start a crowdfunding website. You want to be sure that your platform doesn’t contain bugs so that visitors have a great experience on your website.
Not all technology needs to be paid, but be sure you’ll get what you pay for; if you use free software, don’t expect the website to run smoothly. It would be best if you utilized a SaaS (Software as a Service) product that will provide real-time customer support services. By using SaaS, you can launch your site fast, while experiencing as few issues as possible. If there are any bugs on the platform, you’re not left on your own to fix the problem.
Before you start searching for a SaaS, ensure that you have established a set of requirements. These requirements should include a list of features you require, as well as the user journey found. Create a list with all necessary features for your website to function correctly.
Once you’ve completed jotting down the requirements, send the list to the crowdfunding products that interest you. Compare the differences between these products and find the one that suits your needs the most. Also, find a product that allows you to access the front end code, which can save you lots of time and resources in the long run.
Establish the Payment Gateway
Crowdfunding experts recommend that you open up a new bank account for your crowdfunding platform if you are serious about raising large amounts of money through donations on the website. Most crowdfunding platforms operate by taking a transaction fee on each donation sent to through the website.
Depending on how the site has been set up, you can link the bank account to the platform to receive all transactions. This method is an excellent way to generate revenue on the side. One of the successful businesses with this model is Stripe, which is has a safe payment gateway, with low transaction costs, and can be accessed in most countries and regions.
Work on the Content
Once you have established a niche, suitable platform, and found a means to receive payments through your bank, the next step, and perhaps the most daunting, is to add content to the crowdfunding platform. Your website developers should give you access to the front end source code so that you can configure the User Interface to your standards.
If you don’t have access to the front end source code, you will have to use the default User Interface (UI) and features. Another great advantage of having access to the code is you can hire a developer to manipulate the UI if you’re having issues.
While adding content to the website, it’s best if you prepare all content, including images and videos, before you attempt to add them. This practice will help you save a lot of time because you’ll only need to copy and paste the content to the site.
Launch your Crowdfunding Platform
Once the content has been uploaded, and the platform is all set up, it’s time to launch the platform. You should prepare your crowdfunding campaigns before the launch. The first markets you should be targeting are your friends and family. If you can’t have campaigns through them, you need to look for campaigns elsewhere through online communities familiar to your niche.
You should also consider having a pre-launch campaign, which can help you generate the right following before the launch. You can restrict the pre-launch campaign to those who are ready to create an account with a username and password. The official launch of the campaign should be at a big event, with a lot of traffic on the website.
Market the Platform
The website is created and launched on the internet, and the final step is to market the platform. The idea is marketing the crowdfunding platform so that multiple campaign creators approach you to create a campaign on your platform. If you reach a level where campaign creators are working with you, you don’t have to do any more work to generate income. This can be a great source of income for people who are looking to generate revenue only by approving and disapproving crowdfunding campaigns.
Possible Challenges When Starting a Crowdfunding Business
Once you start your own crowdfunding business, you are likely to experience multiple difficulties, especially the presence of established crowdfunding platforms, which offer the same services you offer. The best way to overcome this challenge is to create a niche with your market. Some of the other problems include unfavorable government policy, cybercrime such as fraud and hacking, the economic downturn that affects spending power and arrival of competitors.
- The legal entity to use for your crowdfunding platform
You can register your crowdfunding business as either a general partnership or an LLC. General partnerships are more appropriate for a small-scale crowdfunding business, especially if you are starting with moderate capital. LLC is best if you intend to grow the company to have both individuals and corporates.
Setting up an LLC covers you from personal liability. If anything about your crowdfunding business goes wrong, you’ll only risk the money that you invested in the company. LLCs are so simpler to create, flexible to operate, and you don’t need managerial formalities such as shareholder meetings and a board of directors. If you survey all possible legal entities, you’ll discover that an LLC is the most suitable. In the future, when the enterprise grows, you can convert it to an ‘S’ corporation or a ‘C’ corporation.
- Insurance policies
In most countries in the world, you can’t start a business without having a form of basic insurance cover. It is imperative to create a budget for insurance policy cover. Consult with your insurance agent and find out the most appropriate insurance policy for this business. Some of the basic insurance policy covers you should consider purchasing include general insurance, credit insurance, liability insurance, payment protection insurance, business owner’s policy group insurance, and risk insurance.
- Financing your crowdfunding enterprise
You don’t necessarily require a large chunk of capital to start a crowdfunding business. It would help if you had a standard office at a convenient location, costs to equip the office and pay workers, and to cover the fee for securing a user-friendly website.
When you are starting your business, one of the most important things you should consider is writing a great business plan. With a well-laid-out plan in place, you can easily convince your bank, friends, and other investors to invest in your business.
You can source your start-up capital by raising money from personal savings, sale of personal property, borrowing money from investors and business partners, selling shares to interested investors, applying for business grants from donor organizations, and angel investors. You can also source capital from soft loans from your friends and family.
