In the past decade or so, crowdfunding and crowdsourcing have both become staples of the online world. Most people will be familiar with the practice through charitable fundraising, political and social action, or – in all likelihood – news stories of a ridiculous Kickstarter project that has generated thousands of dollars in backing.
But for entrepreneurs, these platforms and methods can go further. You can utilize the support of the collective to drive innovation in your business, boost the success of your projects, and gain a competitive edge in your industry.
How can you best approach embracing the crowd in this digital age? We’re going to take a look at a few key areas of its use, and some strategies and tools you should be using to enhance your success.
TO FUND PROJECTS
All businesses require capital. If you’re financing a small enterprise, you may be able to take out a small business administration (SBA) supported loan for the initial set up and running of your operations, you might even be taking care of some unexpected equipment expenses using credit cards or short term loans. However, in recent years, crowdfunding has become an increasingly practical option for companies to both finance projects and sustain long-term functions.
It’s important to remember that this is not a silver bullet to your financial challenges, though. Setting up a crowdfunding campaign requires significant planning and careful execution. You’ll tend to find that setting up a Kickstarter or GoFundMe campaign simply to take care of your payroll expenses is not going to fly. This is usually more appropriate to fund specific projects your business is undertaking that you feel the public will be interested in engaging with. As such, movies, events, board games, and new product lines are better focuses for this style of funding.
When using this method to fund a project, you need to also provide your audience with incentives to engage with it – other than access to the final product or service. These rewards, alongside established trust with your business, can be the key to your success. However, you need to gain insights through market research analysis into what rewards your potential contributors prioritize. This can be done in-house by hiring an analyst or by engaging a consultant, but they will pursue qualitative and quantitative studies to determine the viability of your project in the present market. Through expert data analysis and some social knowledge, they can help you build a donator profile (like a buyer persona) to ensure you can direct your campaign more effectively.
TO DRIVE INNOVATION
Every entrepreneur wants to believe that they and their staff have the ideas and talent that will make their business stand out in their industry. However, even the best of companies can find that the work that they are producing just isn’t connecting with their target demographic, or isn’t helping them to level up. The most effective leaders know that diversity is instrumental in driving innovation, as such it can be wise to use the tools of our digital age to connect with the most diverse pool possible – the crowd.
Crowdsourcing ideas can certainly have varying levels of success. You can’t just declare on your social channels that you’re running dry of innovation so you need the public to help out. This can be detrimental to customer and investor confidence in your brand. Rather, you need to be clear in your goals – in what area are you hoping to spur innovation, what section of the population or communities might be able to provide you with relevant ideas. Do you need inspirers who can give your team some good jumping-off points, or are you mounting a talent search to build a new team? The better you can establish your intentions, the more effectively you can direct your crowdsourcing.
It’s also important to consider what the crowd gets out of your sourcing of their ideas, too. In the past, businesses have framed crowdsourcing as competitions in which ideas – such as new flavors of products or marketing slogans – receive prizes in return. However, as the public is becoming savvier about the value of their ideas, it is becoming clear to them that this approach can be both not in their best interests and unethical. Innovations should be rewarded meaningfully. The LEGO Ideas program is a great example of this. They invite contributors across the planet to submit plans for Lego sets, have customers vote on them to establish market potential, and in exchange, the designers get a percentage of the profits.
TO MEANINGFULLY COLLABORATE
One of the ways that our online landscape is proving the most fruitful is in the potential for collaboration. Staffing can be expensive, and if you are being frugal in managing your business’ finances, taking on new employees might not be an option. Therefore, when running a small or solo operation, crowdsourcing for collaborators can be a useful way to obtain key talent for your projects.
Networking platforms are usually the best resource for this. Professionally focused social media such as LinkedIn, LunchMeet, and Opportunity can be excellent resources here. This is because these are designed to help locate and facilitate professional relationships. If your project is tech-based, utilizing online forums in your specialization can also lead to willing collaborators, particularly if you plan on creating an open-source product.
However, it’s important to remember that crowdsourcing collaborators isn’t about free labor. It’s about finding people as passionate as you are about creating something positive and making sure that everybody has an equal and fair stake in any profits or ownership rights that result from the project. It’s also helpful for you all to agree on communications and collaboration platforms to use, particularly if you all live in different countries. There are plenty of low-cost resources like Slack and Microsoft for Startups that can be helpful in this regard.
Having access to the crowd in our digital age isn’t just about gaining an audience, it means you have the potential to gain vital resources, too. Whether you choose to utilize it for funding, innovations, or collaborators, it’s important to be clear on your goals and plan accordingly. Indeed, as other people are always involved in this approach, you must make certain to treat them fairly in response to their contributions.