Crowdfunding can be an exciting way to get a project or business off the ground, but entrepreneurs need to be realistic about their goals and resources in order to build a better crowdfunding budget. There are several potential pitfalls for entrepreneurs. Failure to take these things into account can wind up a project that is nominally a success actually turning out to be a failure. Meticulous planning that takes into consideration every potential expense with a modest built-in cushion for the unexpected can go a long way toward keeping a potentially successful campaign from becoming a financial or even reputation-breaking disaster. This crowdfunding tip suggests some of the areas that might need extra planning.
Postage: Cost of shipping can severely impact a budget – particularly for companies that will ship to “anywhere in the world.” While this can gain a lot more people signing up for your campaign, it is a potential campaign breaker. International shipping costs can be unpredictable, to say the least. When planning your campaign, decide whether you want to deal with this problem or not. Many small businesses or new entrepreneurs opt to only ship within their own country – thus cutting the costs of airmail shipping and similar constraints.
Taxes, customs duties and other International Fees: In addition to postage, different countries and even, sometimes, different states or regions within a country have charges that must be taken into consideration when shipping internationally. These fees must also be taken into consideration.
Federal, State and Local Taxes: If you engage in an activity that generates income, then chances are that there will be agency that is legally entitled to a cut of your proceeds. Make sure a cut for the Tax Man is planned into your budget.
Packaging: Some products, such as movies, music or audiobooks, can be set up as a download. By making them downloadable, you can avoid a lot of the problems involved with shipping. You will still need to deal with taxable income, however. If your product is tangible and will need to be shipped via the mailing system, then you will need to create a way to box it and to label it so it goes to the right destination.
Security: If your product or some portion of it will be delivered virtually, you will need to find a way to protect it from being downloaded without payment. Don’t count on being small to protect your intellectual property from illegal access.
Cost of creating and maintaining a website: Even if the cost is minimal, most servers that provide a professional website do charge for the space and maintenance. It is charge that needs to be figured into your over-all budget.
Advertising: No money making endeavor is complete without some way to get the word out about it. Professional agencies, such as SMT Agency – the power behind Best Crowdfunding Websites – can help you to get the word out about your project. Fees for advertising should definitely be part of your budget.
Time and people to pack your product for shipping: Your product will need to be tucked into its box or container, labeled, the postage affixed and it will need to be made ready for shipping. Whether you invest your own time, create a staff or send your products to a professional shipping company, these costs need to be taken into consideration.
Your particular project might have its own hidden expenses, depending upon your product. Be sure to check on every potential expense that you could possibly imagine, and plan in a little extra before your campaign goes live. Crowdfunding is a good way to gain support for your project, but it isn’t exactly ‘free’ money. There is a lot of work goes into a campaign, and every campaigner has an obligation to the people who contribute. Good planning might not cover every contingency, but it can certainly help you to avoid some of the most egregious mistakes.
A well-run campaign with good follow-through on communication and on rewards to those who pledge their support opens the possibility for future campaigns. Maintaining a good reputation with crowdfunders increases the likelihood that if you want to run another campaign at some point, you will already have a happy fan-base who know that they can trust you to make good on your promises.