When starting up a new business or looking to expand your existing, one of the biggest obstacles many face is sourcing funding.Traditional routes of funding are becoming increasingly difficult to come by, with banks failing to see the potential in innovative business ideas.
At Fascia Graphics®, where we manufacturer membrane keyboards, graphic overlays and screen printed labels, we are no stranger to the difficulties of sourcing funding, especially in our start-up stage. Many years on, (now being twenty-one!) we have continued to grow and show no signs of this letting-up or stopping.
It is a common tale that manufacturers arefinding it difficult to access funding, so many are looking to alternatives. One such alternative is crowdfunding, which has become somewhat of a buzz word this past year. But does it actually work?
For British banjo manufacturer Shacklton it certainly does. The masters of crowdfundinghave just completed their second round of money raising, receiving over £33,000 for their Ernest Shacklton themed clothing label. They first conquered the crowd funding platform when they succeeded in raising nearly £50,000 to bring their British made banjos to market.
How does Crowd funding work?
The basic premise of Crowdfunding is that anyone with a business idea, invention or innovation can set up an account on one of the many crowdfunding websites to attract everyday ‘real people’ investors, somewhat similar to the set-up of the popular TV show Dragon’s Den.
When setting up a crowdfunding account, you pledge rewards for a certain level of investment. Typically these rewards are pre-orders of the product you are selling. You then have a set amount of time in which to attract investors and reach your target funding. If during this time you reach your anticipated level of funding then you receive that amount, however if at the end of this time you do not, you receive nothing.
Benefits of Crowd funding
One of the great benefits of crowdfunding, other than if you manage to raise the funds your need, is that it test the products/services potential market. If you market your crowd funding page successfully then, then you can get a clear indication to what interest there is in your new product and a pretty good litmus test of a business’s potential to succeed long term.