85 – Other people finance your projects: Tom talks Crowdfunding

Episode 085 Crowdfunding.
How to get the money for your projects and never have to pay it back. How cool is that?
Last Episode 084 Art Sobczak This guy is the greatest at something I absolutely hate. Calling people to try to get business commonly know as “cold calling”. Art coined the term “smart calling” which makes this marketing task much less “Cold”. His techniques can make you money.
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Main Event
Crowdfunding -- get the money you need for your business or personal projects and never have to pay it back. So, what exactly is crowdfunding. It’s where you get lots of people to participate in your projects. I emphasize the word “Contribute” because everyone that gives you money gets something in return as opposed to “donations” where people just give money for the satisfaction of doing it and maybe for a tax deduction.
There are over 400 websites that help facilitate crowdfunding efforts. Some of the best known are kickstarter.com , gofundme.com , Indiegogo.com and patreon.com These sites take a percentage of the money you raise. Most of the big players take about 8 percent plus a per transaction fee of about .20 cents. You don’t have to use a crowdfunding site. You could just collect money on your website and save a few percentage points, but in most cases, you would be giving up some significant things by collecting the money on your site.
The big sites have credibility. People generally feel more comfortable doing business with a big, well-known site. Also, the big sites have millions of visitors that could participate in your promotion even though they’ve never heard of you. If they like your idea, they kick in money. Also, they take care of all the technology. They collect the money, they have an email system to keep in touch with the people who participate…..I was going to say donors, but remember….these are NOT donations. People are participating and they get something in return for their money.
One thing to keep in mind is that these sites mostly do not collect money for “charitable” causes. There are plenty of sites to collect for charities. These sites are specifically designed to collect money for “creative campaigns” although I have heard of people using crowdfunding to fund their dental work and other cosmetic procedures I don’t really want to mention. LOL I guess certain bodily enhancements could be considered creative. hahaha
Another thing about the crowdfunding sites. You want to choose the site that has campaigns similar to yours because more people interested in your type of campaign will be visiting the site and looking at your campaign.
Success Stories
There have been so many great success stories out there. One of my favorites is the lady who was reading to young children in a ghetto somewhere just to try to keep them away from the bad things happening on the streets. She wanted to raise enough money to get a little cubby hole of a store front where the young children could come for her to read to them. I think she needed about $4000.00 for rent and furniture. I don’t remember the exact figures She ended up with something like $111,000.00 because the campaign was so heart touching.
Some guy invented an Iphone accessory and he needed $15,000.00 for a prototype. He got publicity on one of the big sites like Gizmodo or wired and ended up with $365,000.00
You can look up these and many more stories, but there’s another side to this. Far more crowdfunding campaigns fail miserably because people don’t plan them carefully and they don’t give them enough time to get all the planning in place.
Why People Participate
Before we get in to all that, many people wonder why anyone would participate in putting money in to your campaign especially if they don’t know you. There are several reasons. 1. They know you and want to support you. That’s pretty simple. Kicking in a few bucks for a friend’s campaign is no big deal and won’t break the bank. 2. People trade participating in campaigns, i.e. I give you a $100.00 and you give me a $100.00. You might think this doesn’t make sense, but it makes perfect sense when you consider when you thank me, I will be put in front of all your friends and followers and when I thank you, you will be in front of all my friends and followers. 3. People just like the idea like in the two examples above. Most of the people that participated didn’t even know the person they were giving money to. They just liked the campaign and this is one of the benefits of being on a big and reputable sites. You have the potential for millions of people to see your campaign. 4. Potential investors contribute to campaigns they might want to take part in in a bigger way. They want to see how you treat people and how well you run your business. If they like what they see, they might swoop in with a big offer to buy your company or invest heavily in your campaign. In this case you would have to give up part of the business. These investors are not going to pony up big bucks in exchange for ball cap or t-shirt
Perks
Speaking of ball caps and t-shirts these would be examples of perks. Perks are what a person gets for participating in your crowdfunding promotion. You’ve seen them on PDS where you give so much money and get a DVD, or Tshirt or something. You have different levels of perks for different amounts of money. Let’s say if someone contributes $5.00 you thank them and give them a shoutout on Facebook and twitter. Maybe $20.00 gets you a digital download pdf, audio or video. Maybe $50 bucks get’s you a ball cap or T-shirt. Maybe $100 bucks gets you a 15-minute consultation. Maybe $500 bucks gets you a producer’s credit on a video production you’re doing. Perks can be anything of value. I highly suggest you look over many crowdfunding promotions to see the things other people are giving out as perks.
If you have to ship your perk make sure you account for the cost of the perk, the postage, the packaging and handling if you have to pay someone to haul them to the post office. You don’t want all the money you got to be eaten up in sending the perk because you won’t have any money left over for your campaign.
Realistic Goals
If you’re publishing a basic business book, it’s a little bit ridiculous to make a goal of a million dollars. The chances of you getting that even if you’re a celebrity are pretty slim. Some systems require you to meet your goal or you don’t get any of the money. I guess their plan was to keep people’s goals more realistic so there would be more overall successes on the system. So they look better.
On the other hand, you shouldn’t cut yourself so short that even if you reach your goal, there’s not enough money to do what you set out to do. You really need to do a budget and really figure out how much money you actually need with a little bit over to take care of unforeseen problems that arise.
Over Funding
The best thing that can happen is that you reach your funding goal and people keep contributing so that you exceed your goal. This should mean you have plenty of money to accomplish your original campaign. To keep the overfunding momentum going you would announce on your crowdfunding site and in correspondence with your participants what you will do with the extra money. Maybe you can now afford to print up more books, or build two prototypes with different features, advertise more or whatever makes sense for your campaign keep people advised of it.
Make a video
Again, I want to reemphasize that you should spend lots of time looking at other people’s crowdfunding campaigns. Many will have a video telling about the campaign and all the great perks people will get for participating. Tell how you got the idea and all the great things you want to do with your campaign. Show your personality. Make people want to help you. Show your passion.
This video does not have to be professionally produced, (unless you are pitching a film or video campaign). In fact, being homemade looking can be an advantage because if it’s too slick, people will think you don’t really need any help.
A student of mine raised $4400 dollars with just a cell phone video with written text underneath in case someone would rather read than watch a video.
Momentum
The reason you really want to plan ahead before you make your crowdfunding efforts go live is the topic of momentum. You want to have your biggest supporters ready to jump on the crowdfunding site the moment your campaign goes live. That way when others that don’t know you as well visit, they will be influenced to go ahead and participate. No one wants to contribute to a losing cause. If they see no one else has contributed, they may think it’s a bad campaign. You don’t want them thinking that.
So, you get everyone who has already agreed to contribute to do it as soon as possible when you go live.
Another thing you can do to take advantage of momentum is to add additional perks as the campaign goes along. I’ve witnessed many people who participated near the beginning come back and participate again just to get one of the new perks.
Planning
Let’s go ahead and talk about planning. You should plan a minimum of 30 days out for smaller campaigns and 60-90 days out for really big campaigns. One thing you want to do immediately is start brainstorming on every single person in your life you think would participate. One of my students was in her 30’s and hitting up people she went to grade school with LOL. The reason you want to do this well in advance is that you can’t possibly just sit down and think of everyone you know. As you start brewing on this in your mind every day prior to the launch you will think of more people. You need to capture these people either by audio or writing a note to yourself. Besides thinking of them, you have to make sure you know how to contact them. People move, change phone numbers, get married which means their last name might change etc. You won’t want to wait till the last minute to contact these people. You want them anticipating launch day and you have to keep after them. People that totally love you as a friend have their own lives and they probably aren’t wrapped up in your world. Without being a pest, you have to keep after people who have promised to help you. So, it’s a lot of work.
You have to plan out your video. You have to plan out and possibly create your perks and the perks you plan to add to keep the momentum up. You have to do your budget to see how much money you actually need. You have to pick which platform you’re going to use which means you have lots of research to do to find the one perfect for you. Maybe you need promotional graphics made up. Maybe you make a business card specifically for the promotion. You have to prepare thank you emails and social media posts. Tweets and a ton of other little details. The reason many people fail at crowdfunding is they simply throw something together thinking, “this is easy money.” I assure you it is not. Besides the pre-planning, you have to work things hard for the length of the promotion. If you don’t, it will probably fizzle fast.
Speaking about length of promotion you can go sometimes up to 90 days on the actual promotion but you’ll be exhausted by that time. What I like to do is hit it fast and hard for 30 days max and just concentrate all your efforts right there.
OK. Here’s some best practices to keep in mind when doing a crowdfunding campaign.
Just know that this is a lot of work, but the money is out there if you just go out an get it.
Best practices
• Tell a great story about your campaign and why you are the one to make it happen (with their help of course)
• Thank people often and thank them publicly (unless they want to remain anonymous).
• Without being a pest, remind people constantly of what you are doing. Some of your best allies and friends are busy and chances are your crowdfunding campaign is not the number one thing on their mind every day.
• Network and talk about your campaign constantly. You may convert people that don’t even know you to contributors because they like the idea and they like your enthusiasm.
• Send out email and messenger broadcasts.
• Place the event prominently on your website/blog
• Shoot YouTube videos about your campaign.
• Do publicity stunts One guy went on a marathon no sleep night on Facebook live that he won’t leave Denny’s until he hit so many contributors.
• Keep your contributor’s in the loop of how things are going. Thank them profusely and encourage them to tell others about the campaign.
So, plan, plan, plan and go get the money!

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