So you’ve come up with the next great idea, but you can’t afford to manufacture it yourself yet. Don’t rush off to the bank and ask for a loan, or call up your parents and see if you can borrow some cash just yet. Thanks to crowdfunding you can now turn your dream into a reality without falling into debt! And without getting the look of shame (or is that failure?) from your parents.
The most prominent option for crowd funding these days is Kickstarter, and it is simple. Have an idea, launch your project, get people to back you and you’re all set! But before you press go, here are a few tips from experienced Kickstarters that wish they knew this before starting their journey to financial independence.
Social Media Is Everything!
You have to start building your network well before you launch your project. Facebook and Twitter are a must, and then getting to know your community on Reddit, product specific blogs and other relevant online spots where your backers communicate is the only way to succeed. Build up your reputation by sharing content they would be interested in, try to meet some key players in the area and get your name out there.
Direct traffic on Kickstarter alone won’t get your project funded. In fact, most projects see that both Facebook and Twitter drive more traffic to their projects, with blogs coming in just behind direct traffic. Social is also a great way to keep everyone updated on the project, since many of them don’t check back after backing.
Understand Your Costs
This might seem like a no brainer to people, but the extent of understanding your costs might not be known. Not only that, but the “hidden” costs associated with the campaign, manufacturing and shipping can be hard to determine.
The first line item to factor in is the Kickstarter fee. I know, shocking that they don’t do this out of the goodness of their hearts. Off the top, you’re losing 5% to Kickstarter. After this, there is a payment processing fee of 3% + $0.20 per pledge (pledges under $10 have a 5% + $0.05 per pledge fee). There’s probably a good 10% of your pledge money off the top, so make sure that is factored into your goals.
Every bit of your manufacturing needs to be understood as well. How much do parts cost if you only order 500? What price cut do you see at 1,000? How do materials change pricing? Check out multiple manufactures and find the best fit for quality and cost for your product. They should be able to provide you with a prototype, and from that help you to understand the cost per unit based on quantity.
This prototype will also help you to get a better feel for how much shipping will run you. Keep in mind that you’re not just shipping locally, you will have backers from around the world. Find out how much shipping your product globally costs and either factor that in to the final price or let them know there will be an additional shipping fee added to their final pledge.
Oh, and then there are taxes, PR, marketing, social advertising, and hiring help as needed... Let’s leave it at that.
Communication Is Key
Let’s start out with your video. Yes, you need a video showing off your product, or at least describing the product and campaign. No one expects you to be making the next Star Wars, so don’t spend too much time tweaking every little detail on it. That being said, have a script. Make it sound like you know everything possible about your project. Instill confidence into prospective supporters and explain (and show) why they want to back you.
The first days and final days of your campaign are extremely important, so make sure to post updates regularly to your project page, as well as to your social media channels. Add compelling imagery of parts, new videos of you hard at work, or just updates on funding goals and stretch goals that are being unlocked.
This communication doesn’t end the second your project closes, and this is key. Everyone (well, almost everyone) realizes that you’re probably not a huge company and that you’re going to hit some snags in production, and they are more than willing to give you the extra time needed to create your product just right. What isn’t acceptable to them is to be left completely in the dark about it for weeks and months at a time, wondering if you just ran off with their money. Be honest and keep your backers up to date with progress, good or bad.
Plan for HUGE Success. And Failure
The strength of the Kickstarter community is amazing to say the least. You might not know if anyone out there wants your product and end up at 500% of your goal. On the other hand, you could be certain you have something everyone wants and end up at 3% (thanks, mom!). How do you proceed? Make sure that you have a plan in either case.
Huge success is great! That’s the idea after all, right? But you know what they say, “Mo money, mo problems.” Blowing out your goal can lead to delays in manufacturing, changes in pricing, additional shipping and storage costs and more time for assembly just to name a few potential issues. Make sure you have a strategy in mind if this happens, and let your backers know you have it under control.
Now if you only have a few pledges, does that mean you have a terrible product? No. You might not have had the best strategy going in (because you’ve ignored everything I discussed to this point), you might not have been ready to launch when you did. There are any number of reasons that your project didn’t go as hoped, but what will you do? You can always regroup and try it again, or you could go out on a more traditional path and manufacture your product without the support of Kickstarter. A word of warning. If the crowdfunding community wouldn’t have you, there’s probably a reason. Figure out what that was before proceeding. Worst case, scrap it all together and go back to your 9 to 5 job.
Your Life Is Over
This will be your life for the next month, plus. You have to be constantly advertising on social, updating your project, answering questions from potential backers. All while you keep your project moving and potentially work your regular job and spend time with your family. Maybe it’s time to hire an assistant? No, really.
A good Kickstarter campaign could be taking up 8 – 16 hours a day, so it’s not a one person job. Fortunately there are places that you can hire virtual assistants to take some of this off your plate. You can always ask your friends to pitch in too, though you get what you pay for.
After the project is over, remember it is going to still be a constant time suck as you transition from raising funds to fulfilling purchases. This might just be emails and calls to manufacturers, or you could be in your basement assembling, boxing and shipping. At least can be a family activity!
There is still endless advice you could get for launching your first Kickstarter (have stretch goals ready, have your company already started or in the works, prepare artwork ahead of time, don’t have too many tiers, don’t create random swag, don’t discount) but we’re going to leave it at this. If you’re still inclined to launch a project, good luck! Let us know about it and maybe you’ll have another pledge coming your way.
If you have any additional advice for fellow Kickstarters, or want us to give your project a shout out on our next podcast, let us know at firstname.lastname@example.org.