The Girl Scout promise begins with the words, “ On my honor, I will try . . . ” These are significant words, because they recognize that young Scouts, who are just learning to manage themselves, are not always going to succeed with their goals. New businesses and crowdfunding endeavors share similar challenges, and they will not always succeed. But if you, on your honor, try your best to meet your goals and strive to keep your promises to the people who pledge their support, then you will be on your way.
You might say, “But what does that have to do with crowdfunding?” It has everything to do with crowdfunding. If you enter a search into Google or Internet Explorer for “crowdfunding news” you will come up with stories about failed crowdfunding campaigns – particularly the ones that did not follow through with their pledge promises. When that happens, not only is it bad for the fledgling companies and entrepreneurs who were not able to fulfill their pledges, it is bad for future crowdfunding campaigns. No one wants to be the sand in the gears.
With that said, let’s take a look at some statistics. About forty percent of crowdfunding campaigns succeed. That’s probably about sixty percent less than participants could wish would make the grade, but it still isn’t bad when you compare these stats to those for small businesses in general. Some sources say that about 80 percent of small start-up businesses will fail in their first year; others say that the success rate is more like fifty percent, rather than twenty percent. Either way, with that comparison, a forty percent success rate for crowdfunding campaigns is not bad at all.
Business startups that begin with a crowdfunding campaign have a leg-up for getting off to a running start. Platform companies, such as Kickstarter and Indiegogo create a template for getting a business in gear. Furthermore, they provide a way for small businesses to gain start-up funding and to test their ideas. One of the big reasons for small businesses to go belly-up in the first year is lack of money. Young crowdfunded companies with great ideas and a dedicated team have a great chance of success because if their idea is good enough to catch the imagination and backing of crowdfunders, they almost have a ready-made customer base for future products.
Getting funded is just the first step in crowdfunding success. If your campaign was for the purpose of developing an idea, there is always a chance that something could go wrong in the steps between idea and production. That is the chance that both you and your supporters are taking. As an article on TechCrunch points out, pledges are not actually pre-orders – even if you and your supporters hope that they will be exactly that. Lots of things can happen between design and product: the idea might not work, the materials might turn out to be too expensive, or the manufacturer you lined up (and paid) might go broke before producing your item. Sadly, these things do happen and they are heart-breaking.
But there is something that you can do for your supporters and for yourself. You can practice good communication. Send out periodic newsletters letting your people know how things are going. Tell them when a glitch develops in the works. Send out happy news like, “Special envelopes for the character cards came from the printer today.” Or “team is all lined up and ready to pack orders as soon as the shipment is in.” But, because this is the real world, be honest and tell your people things like, “Product is done, but is hung up in customs. I’ll keep you updated,” or “U.S. Postal Service raised its rates just in time to catch your shipments in it. Will be shipping as quickly as can afford to send.”
Remember, the key here is that on your honor, you will try . . . You will try to fulfill your pledges, you will try your hardest to have a viable product. But above all, you will try to communicate effectively with your supporters – the people who sent money to you in good faith that you would do your best to get to them the product or the idea that fired their imaginations and opened their wallets. In our modern world, with the Internet, Facebook, Twitter, Pinterest and the crowdfunding platforms themselves, communication is one way that you can, indeed, uphold your honor regardless of the monkey wrenches that fate throws in the works.
Best Crowdfunding Websites has posted a number of success stories about crowdfunding campaigns. We know that not all of the news about crowdfunding is bad. We are proud to have done our small part in promoting these campaigns, and we are pleased to have been trusted by the people who created them to help get the word out through SMT Agency about their campaigns. Not every campaign will succeed. But all of the great ones have used two simple ingredients: on their honor, they have done their best; and they have kept up communications with their supporters.