Crowdfunding is booming as a way to promote a small business idea. And new rules for equity crowdfunding could mean even faster growth for investors. More than $16.2 billion was raised in 2014, more than half of which came from North America (where crowdfunding grew by 145 percent from the previous year). In fact, growth in North America was only surpassed by South America – where crowdfunding grew 167 percent – and in China, where volume in the online phenomenon surged by 320 percent over the year.
But don’t think crowdfunding is just about raising money. The benefits of crowdfunding go well beyond fundraising. These include:
- Product advice and insight that would normally cost thousands:
Your campaign supporters will tell you exactly what they like and don’t like about product ideas and features. It’s like a focus group of thousands.
- A community that includes lifetime supporters of your brand:
Crowdfunding backers feel a special buy-in with the businesses they support because they feel like they helped make it possible.
- Free marketing on websites that reach millions of people:
Your campaign is an entire page dedicated to your message and brand. People will actively watch your video, read your message, and share it with their friends because they see it as a special project – not as a commercial.
If crowdfunding is such a great opportunity, then why have only about two percent of small business owners used the approach, and why do 63 percent of campaigns fail to reach their funding goal?
Crowdfunding isn’t as easy as throwing a campaign online and waiting for mountains of money. It’s no longer enough to post a video and a personal message to supporters. From start to finish, five common pitfalls continue to trip up business owners and prevent them from crowdfunding success. Understand and avoid these common small business crowdfunding pitfalls to get the most out of your campaign.
Crowdfunding Pitfall #5: You ignore the legal side of crowdfunding
Despite the social nature of crowdfunding, the internet can still be a very uncertain place. You won’t find any demarcation lines between countries, or a formal police force with jurisdiction over the World Wide Web. While copyright and patent laws still apply, they can get lost in the immense growth of crowdfunding and the breadth of the internet.
Last year, Kickstarter alone received 282 claims under the Digital Millennium Copyright Act, including 28 claims of trademark violations. Of those, action – removing images, videos, and/or deleting projects – was taken on 44 percent of the claims.
Don’t think you can freely use other people’s intellectual property or that yours is completely safe on the web.
- Seek legal counsel on patent and copyright protection before pre-launching your crowdfunding campaign. You have one year after publicly announcing a product to file a patent application. After that 12 months passes, you won’t be able to get patent protection.
- Do not divulge trade secrets to campaign backers or on your crowdfunding page. Your community of backers can be instrumental in product development, but make sure you sign non-disclosure agreements with anyone that gets special access to information.
The Takeaway: The informality of the internet can be deceiving, especially in crowdfunding. Make sure you protect any intellectual property with patents and copyrights. Do not plagiarize work or infringe on copyrights or patents.
While these aren’t the only pitfalls in crowdfunding, they commonly trip up campaigns and can keep you from achieving your goals. Focus on the takeaways from each pitfall and put together a broader view of the benefits. Look closely at what crowdfunding can do for your business and you may find that the money is little more than an afterthought.
To see the original article click, here.
Recently I had the privilege to interview a friend of mine, Pete Gardner. He runs a boutique luxury hand made chocolate shop in Leicester City town. Rather than talk about his chocolates (which are great by the way, if you’re in Leicester you have to go!) I wanted to talk about his journey to where he his and true story of what it is to be an entrepreneur. Below is a short interview talking about the success, failures and struggles of running a business from nothing. I want this interview to be an inspiration but also a reality check for all those wanting to be entrepreneurs, I would definitely encourage to take this route but be weary of the journey and obstacles you will face. So let’s into the interview:
Q: Walk me through the step-by-step process that you went through to get to where you are today?
A: It’s been a 7 year process, originally I wanted to create a business which I could franchise. I quickly realised that there was no Branded handmade chocolate shops on the UK high street. I decided I wanted to create a handmade chocolate experience which can then be rolled out as a franchise model. I began by teaching myself the chocolate making process by watching instructional videos from different chocolate companies online and reading recipe books. I practised a lot at home whilst working a full-time Bar job. Eventually I got to the point where I had a rough product and a rough brand, I took that to East Midlands Enterprise Loans in Nottingham who gave me my first £15,000 loan to Kickstart Chocolate Alchemy in Loughborough. I sold Chocolate Alchemy in 2013 and used the money to create Cocoa Amore which is a more refined version. Cocoa Amore was created with the franchise model in mind and with the move to our new flag ship store on Silver Street we are now in a perfect position to begin rolling out the brand over the next 5-10 years.
Q: How long were you running the business before you started paying yourself, and how did you change your lifestyle to adapt to the situation?
A: I made a lot of sacrifices. You can plan as much as you like on your cashflow but the reality is your costs will always be 2/3 times more than you planned and you’ll take 2/3 times less money than you planned too, it’s horrendous. I always have a survival analysis – worst comes to worst what is the minimum you can live off? when you break everything down it includes even the simple things like takeaway, DVD rental and clothing allowances. What’s the bare minimum you can afford to live off. Then try and stick to it. It’s hard, it took three years before I started taking any money from Chocolate Alchemy. You have no life for the first year, which was probably the longest year of my life, I had two days off that year for Chocolate Alchemy. I would work through the night to make products for the next day, teaching classes in the evening, running the shop on my own during the day. It can be really isolating because when you don’t have any staff and any customers it can be pretty soul destroying. It was a good three years before I started to take a salary. It’s only been in the last year I’ve been able to save money and start living. No holidays, going out, eating out – no social life really. It’s a lot of sacrifice so if you’re going to work for yourself you should always do what you enjoy doing, not what other people are telling you that you should be doing, if you do you might as well get a job and not have the hassle of running a business. I’m lucky in the sense I just do what I want to do and if I don’t like doing it I don’t. (Me: that’s the whole point of doing business, to be able to do what you want to do) exactly.
Even when it’s at its darkest, it’s not over till it’s over.
Q: If an upcoming entrepreneur asked for your advice and you had a few minutes to give them your best tip, what would it be?
A: Just don’t give up. Things take time, it always takes longer than you expect. Just never give up, never surrender. The next person to walk through that door could be the next person to make all the difference, it could be a shareholder; someone wanting to buy a franchise; could be a food blogger who wants to write a nice review. Always show people your A game and never give up. Even when it’s at its darkest, it’s not over till it’s over. Keep a brave face on and keep smiling. (Me: to put it into perspective, it’s been seven years since you first set up?), seven years yeah, I opened Chocolate Alchemy in 2009 but it took me a good 6/12 months to actually learn and get to a certain level where I could open the shop. It was a bit rough and ready at the start, so it’s been refined a lot since (Me: that’s always the case though, you can’t set up and sell the perfect product or service form the get go) well you can but you need a boat load of money backing you. To build something on a shoestring you’ve got to take it slow and keep chipping away at it everyday.
Q: Running a business is difficult but what’s been your most enjoyable part of running a business?
A: I’m my own boss, nobody tells me what to do. It’s the flexibility and the ability to do what I want when I want. I get to sell the products I want. It’s the freedom.
Q:What’s the future plans for Cocoa Amore? What do you aim to do which will make you different from the competition?
A: You’d be naive to think I don’t have competition, because everybody’s competition even the newsagents that sells a Mars Bar because it takes money out of someone’s pocket for chocolate. But at the same time, we don’t have any real direct competition, nobody does what we do. I don’t sell online, I don’t sell to other distributors, if you want my product you have to come to my store. Which keeps it quite niche. By keeping it tight and keeping our USP, it gives me the chance to roll out a unique franchise opportunity.
Then I get to do the bit I really enjoy, which is helping people run their own businesses. I don’t want a shop, I want to build a company and help people run their own businesses. So that is the plan over the next two years. I could open a 100 shops with staff and manage it all myself which would yield a greater return, but it’s not always about money. I prefer to do things I enjoy doing. Sometimes money just can’t buy being happy and you just have to do it. If someone buys a franchise from me they get all the support, almost like a partnership and mentoring. I can go around helping people with their shops or step in if they’re going on holiday, be a knowledge bank, trouble shoot for them, negotiating with the council with planning and rates, overseeing the product development. I want to build a company to be proud of, I’m not in the chocolate business I want to build an empire. A company that I can build over the next 10 years and sell it at the point where it still has growth potential, but I can take a respectable chunk of money out of it that I can then use to reinvest into small businesses and help them achieve success.
(Me: so you won’t stick with Cocoa Amore?) no you don’t want to be emotionally attached to your business, at the end of the day it’s their to make money and if someone came along and offered me a silly amount of money for my business now I’d take it and start again. Because I enjoy the start up process, but at the end of the day it’s there to make money. The one goal of a business is to make profit. I’d sell it and move on and do something, it’s the beginning I like that’s why I like the franchise model because every time I sell one I get to be involved in another start up business. (Me: wouldn’t you want to expand the business internationally though, if you had the opportunity?) Yeah in those cases you would have Master Franchises who then franchise out to everyone else in their territory. I would then only deal with the Master Franchise. I’ve got faith the brand will go that far, but I’m 34 right now 10 more years I’d be 44 and ready for another change. right in the middle of the country which is great for franchising. I’m not into holidays, or flash cars but to make sure we deliver a good product and build a brand with value. I go home and research, find recipes etc I hate the paperwork side of things which is why I’ve got an accountant. You should do things you like doing really. The point it starts to feel like work, then you need to get out. I’m exactly where I want to be right now but would be lying if I said its been an easy journey.
If you want to find out more about Cocoa Amore, click here.
Do you have a sure-fire winner on your hands with your idea for a retail store? You might have identified the perfect product to sell, but have you thought beyond that stage? Are you up to speed on the many other tasks that need to be faced before you even get close to opening your very own retail store?
The infographic by Irish online till roll provider Paper2Paper (www.paper2paper.ie) takes a brilliantly summarised look at the key tasks that are involved in the establishment of a retail store. From weighing up the competition to choosing the right location to set up shop, finding the necessary funding to meeting the many legal requirements and selecting the right staff, there is much to consider in addition to your product or service.
There is no doubt that the challenge of setting up your own retail store can be a daunting one, and it is one which will require a great deal of self-confidence, perseverance and a willingness to work practically around the clock. However, if you have the business acumen to make it happen, as well as the personality traits to see the job through and turn obstacles into mere tests, it could be the right career option for you. Imagine the pride you would feel if you created a retail store that is not only surviving, but also winning the hearts of the customers who repeatedly walk through your doors, and being able to say ‘I made that happen’.
To find out more about the stages involved in setting up a retail store, check out the infographic below.
if you’re a retailer and you’re worried that online sales are having a detrimental effect on your business, then there may be some good news. First of all, it’s important to remember that 94% of retail sales still take place in bricks and mortar stores, and now online retailers who were previously exclusively online, are beginning to embrace their customers desire for bricks and mortar stores.
Many companies have reacted to demand for bricks and mortar stores as a showcase for their products. For example, Apple now has 444 stores which allows customers to interact with and test their products before buying them. Google also opened their first bricks and mortar store in London in March 2015, to ensure that their customers have an opportunity to engage with their products first hand if necessary before completing a purchase. Find out more in this info-graphic from Store Traffic.
In a post from September 2014, The Start Up Toolkit shared a list of some useful resources and tools for start-ups to help them in business.
Now as a start-up (depending on how many of you there are) it can at times be difficult to manage everything on your own without much help.
During your start-up period you probably have a small budget, and so outsourcing tasks is not an option meaning you’ll be doing pretty much most of the work. To add to this, you’ll be project managing your own time, individual projects, the business and any staff you may have. That is a lot to take care off! Using the resources in the link will help you to better project manage you time and business.
I’ve used many of these resources myself either in the past or in my current businesses. I’ve listed a few of the resources that I use for my businesses:
Talking to customers
- Mailchimp – send newsletters and create signup forms for your website
- Slack – manage projects, used for chat and messaging to reduce email load and easy to find all communication between teams
- Dropbox – store your company documents on the cloud, easy to share files and reduces space on your hard drive
- Themeforest – loads of themes to choose from at affordable prices and it’s relatively easy to use
- Crowdcube – equity crowd funding
- Indiegogo – crowd funding via donations with a focus on arts and creative projects
To read the full article from The Start Up Toolkit and see the entire list, click here.