Asking people to donate money to help your for-profit business works best when they understand why you need it and what they’ll get in exchange. Here are some best practices for developing a successful campaign.
When Nika Kermani needed at least $20,000 in one month to turn her father’s former auto repair shop into a dance studio, she wasn’t sure if her community shared her enthusiasm. But it only took 24 hours to meet her Kickstarter goal—and just another month to meet her stretch goal of $30,000.
That’s because Kermani not only identified a need in her city, but she was proactive about asking for her community’s support and clear about what she was using the money for—something that many campaign creators fail to do. It’s one of the reasons more than half of all crowdfunding campaigns never reach 10 percent of their goal, according to Kathleen Minogue, founder and CEO of consulting agency Crowdfund Better. “Picking a platform? That’s your last concern,” she says. “The first thing you have to think about is organizing your network. Before you start thinking about money and platforms and rewards, take some time and think about your community and how you will communicate with them.”
Whether you have a new business venture in mind or need to keep your existing business afloat, here are some best practices on how to make a for-profit crowdfunding campaign work for you.
Identify Your Supporters
Crowdfunding is truly “community funding,” Minogue says. Who supports you, is proud of you and wants to see you succeed? Identify individuals who know your character, work ethic and passion, and tap them as potential supporters—well before you launch your campaign. “If you’re a dance studio, think about your alumni network,” she says. “If they’re anything like me, their dance studio was their home away from home and they’ll be willing to support you.”
Kermani had grown up in the Bingen, Washington, area and had been teaching dance in many different locations for close to a decade, so she already had an email list and a social media following. Her community knew her backstory, too: Her father had immigrated to the U.S. as a religious refugee in the 1980s and opened an auto repair shop to support his family. When he retired in the summer of 2020, Kermani knew that location was the perfect place to open a cooperative community dance space.
Reaching the right people takes time and planning. Minogue recommends having at least three months to prepare your campaign, especially if your goal is more than $10,000. You need time to create and execute a marketing plan to make sure the message reaches your second- and third-degree networks, she says.
Pick a Platform
Starting in July, Kermani called everyone in her personal network to let them know of her plans to transform her father’s former garage into a studio and that she would be launching a Kickstarter campaign in the fall. She picked that platform because a videographer friend recommended it, and it had good name recognition.
When choosing a platform, think about your campaign’s priorities. Rewards-based platforms like Fundraising by Fractured Atlas, Indiegogo, Kickstarter and Patreon are popular with small businesses, and they allow contributors to pledge funds in exchange for rewards, perks or presales/prepayment for products before manufacturing. These platforms take a percentage of the funds raised and can charge for credit card processing fees; some require that the entire amount be pledged by backers by a deadline or you won’t get any of the funds.
Develop Your Campaign Page
As you develop your campaign, think about what makes your story unique and why people should feel compelled to support you. How does, or how will, your business make a difference in the community? Will you be making a tangible improvement, such as a renovation or a special performance? Perhaps you’re providing scholarships or partnering with other local businesses. Think about how to positively tell your story, even if you’re hoping to raise funds just to keep your doors open. Keep the campaign text short—between 300 and 500 words—and make sure you detail exactly how you intend to use the funds that you raise.
Videos are also an important storytelling element, Minogue says. They should be short and simple, and the production doesn’t have to be expensive—an iPhone camera and existing photographs or video footage can suffice. Start with a 20-second introduction where you “talk about who you are, what you do and have a soft ask with ‘We need your support’ or ‘Join our team,’” she says. The middle should focus on what makes your business unique and testimonials to show other people talking about your business’ value, and use the last 20 seconds to ask for three specific things: financial support, ways people can volunteer or get involved, and then the smallest action a person can take to support you, such as sharing the campaign on social media or with friends.
If you’re working on a rewards-based platform, think of reward options that aren’t going to cost you any upfront money. “People love getting an experience or something they can’t get elsewhere,” Minogue says, such as a personalized video or a one-on-one class. Or, see if area businesses might support you with discounts or coupons in exchange for the PR they’ll get for being in front of an audience they might not normally reach.
Kermani’s backers could choose from a dozen reward options at pledges as low as $10 (a curated playlist) up to $5,000 (naming rights to the lobby). Other options included having their name permanently on the website and/or lobby wall, and sponsoring a youth scholarship.
Keep Your Community Informed
Throughout the summer, Kermani provided ongoing social media updates highlighting the progress she was making inside the space, and promoting the September 9 campaign launch date. She also opted for a prelaunch on September 8, reaching out to family and friends to say “I’m launching a day early and it would really help the campaign if you could think about donating right now, because it could help it go viral if it’s got a lot of traction early on,” Kermani says.
By midday on the 8th, $15,000 had been pledged, and by the time the campaign officially launched on the 9th, it was already fully backed, so Kermani added a stretch goal of $30,000 and began posting updates on the campaign page. Ultimately, she had 243 backers and raised $30,323 when the campaign ended October 11. The platform took its fee and payment processing fees, and Kermani saw around $27,000 deposited into her account.
NK STUDIOS officially opened November 1 at 20 percent capacity due to COVID-19; however it had to close two weeks later due to the state’s shutdown. In the meantime, Kermani launched a full library of on-demand lessons for $35 a month, and she hopes to reopen at a reduced capacity this spring.
Honesty and transparency are key when you crowdfund, Kermani says, adding that she’s still posting progress and COVID-19 updates on social media and the studio’s website. “While it’s not necessarily a huge amount individually, all together the people who donated made it possible,” she says. “They aren’t stockholders, but I owe them updates and I will continue to give them updates.”
Hannah Maria Hayes has an MA in dance education from New York University and has been writing for Dance Media publications since 2008.