The business landscape is a competitive place, getting the funds and capital together to grow can be arduous and near impossible if things don’t line up perfectly. The Australian Bureau of Statistics (ABS) released figures late last year indicating that the value of lending commitments to businesses had fallen by just under 10%. Conventional investor agencies are scaling way back when it comes to business investment. That’s why many SME’s (especially those belonging to Gen Y who can’t get into the property market) are now turning to crowdfunding to get that extra leg-up the need to get to grow their business.
How does it work?
You know about crowdfunding. It’s that thing start-ups do to generate funds to disrupt the whole industry landscape, right? Well, sometimes. As you may have noticed, for every major disrupter business that changes the world there are hundreds of not so successful start-ups that take their backer’s money and run, leaving behind a cloud of dust and a vague statement about how sorry they are things didn’t work out.
That’s one way to use the lending platform, but what about for the established business? Utilising crowdfunding to grow your business, rather than create it, is a whole different ballgame. You aren’t asking people to believe in an unproven concept, you’re asking them to support you as you navigate the terrifying but well-trodden roads of business expansion. Taking on more staff, shipping to more places – these aren’t radical ideas, they’re good business sense. The kind of thing a clever investor can get behind – or a clever backer.
What do backers want to know about?
Just like with any other lending venture, your crowdfunding backers want to know you have a plan. If you make X more in sales, you’ll hire Y more people, those people will fulfil Z role. Don’t be vague, and don’t assume that just because your backers aren’t necessarily businesspeople they won’t understand when they’re being duped.
If you have business partners of companies you work with, mention them. Legitimate business contacts and outsource partners show you have through the logistics of this plan and you aren’t going to spend the next six months trying to network your way into getting started – wasting valuable time and money.
Something to remember
People who contribute to your crowdfund don’t have a whole lot of recourse if things don’t work out, so it’s more important than ever to be as ethical and transparent as possible with your backers. If the timeline changes – tell them. If the offer changes, communicate it immediately. There is nothing more toxic for a business than investors in the dark. Just like a big business with major investors, your first responsibility is to your stakeholders, yours just happen to be from a different source. If you don’t follow through or have poor communication with the people who gave you this opportunity, they’re going to walk away from the experience feeling burned. You do not want associations like that to be the first result on a google search of your business name.
Once your backers have helped you up your game, it’s time to expand your reach. If you’d like to chat with someone about the next steps in increasing your shipping output and reorganising your logistics, we’d be delighted to help. You can always give us a call on +61 2 9828 0111 (Sydney), +61 3 9240 6300 (Melbourne) or +64 9 263 8855 (Auckland) or drop us a note via the form below. Alternatively, you can find a full list of available services here.