In today’s interconnected world of social media, online news and blogs, it’s become possible for a creator to be directly connected to his or her target audience without going through government institutions, media companies or other intermediaries.

Crowdfunding extends this principle to the business investment. Through the services of an online platform, large groups of small-scale investors and potential customers can view sales pitches and business ideas. If they are convinced they can then simply donate money or receive rewards based on the level of their investment.

So if you’re a budding entrepreneur looking for investment who doesn’t want to deal with the challenges associated with attracting traditional investors and financial institutions, follow these four rules to help ensure a successful crowdfunding campaign for your business.

1. Prepare an engaging pitch. You are trying to convince potential customers to fund your products. Therefore you need to demonstrate the selling points of your product through all the tools of social media. A short high-quality video showcasing your idea/product as well your passion and enthusiasm for it is a must. Active blogging, supportive ads through Facebook and Instagram will help immensely in bringing customers. Ideally you will have already gathered enough seed money to operate a website and make prototypes.
2. Only promise what you can deliver. Entrepreneurs typically go for crowdfunding when they already have a prototype and intend to use investment to go into production. Thoroughly research production costs, delivery costs and potential distribution challenges to set a price and delivery time that is realistic. Your reputation on social media is crucial for success; not delivering on your promises is a guaranteed way to lose investors and ruin your chances for a future crowdfunding campaign.
3. Offer Cool Rewards. Unless you’re asking for donations, your investors will expect certain perquisites and privileges for funding your business. Make sure you offer attractive rewards like lowered prices, early delivery, additional services, etc., to your investors. In fact, you need to offer a multi-level system of rewards in order to incentivize investors to fund in larger sums. Someone who has put a $100 into your business, for example, deserves a higher level of rewards than someone who has only invested $20.
4. Have a solid foundation to your business before you crowdsource. Experts recommend that you finance up to 30% of your business beforehand through a close network of friends, family and enthusiasts. After all, even your crowdsource campaign will require money—video production, service fees, marketing and producing prototypes are only some of the potential costs. Apart from this, having a ready pool of funds and promoters will help comfort new investors. If they see a campaign that is already popular on social media and has considerable funds, they are much more likely to see your business as a worthwhile venture.

Even though every successful crowdfunding business is different, every one of them applies the above principles in one form or another. Research each of these guidelines thoroughly and see how you can apply them in a way that is suited to your unique idea or product.

If you are a young entrepreneur, eager to share your business idea or product with the world, you may be itching to acquire capital but may not have the credibility to get in with traditional investors for funds or have access to banks for substantial loans. In that case crowd-funding may be for you.

At its most basic level, crowd-funding is simply gathering capital informally from a large number of small investors and/or potential customers. It requires three parties: an online platform which hosts various business proposals and allows members to fund them for a service fee, potential investors and entrepreneurs who use the site to pitch their ideas. Products and services as diverse as the Pebble smart-watch, novels, charity events, video games and many others have successfully achieved, and often exceeded, their funding targets.

Ordinarily, an entrepreneur has to spend inordinate amount of his own time and money reaching out to banks and investors and prepare sales pitches and brochures, which have to be fine-tuned to each party’s liking. He or she also has to meet a list of legal criteria before becoming legible for banking loans or receiving large investments in general. Furthermore, each party imposes its own terms, conditions and time-frame within which the investment has to make returns.

With crowd funding websites, like-minded investors can be readily and conveniently accessed for marketing pitches, without worrying about pleasing each one individually.  These investors can then become a loyal-customer base that potentially pitches the product to others on its own initiative. Depending on your goals and funding requirements, you can consider three ways to crowd-source:-

1. Donation based: This is the most straightforward method. You typically appeal to friends, family and other interested parties to simply donate money for your idea. This is most suited to charitable work.
2. Rewards based: This is the way that mainstream crowd-funding websites operate on. If you’re a startup, you pitch your idea on the website using a well-designed marketing campaign involving videos, social media ads and blogs to attract potential investors. You state a funding target and timeframe and offer the larger investors incentives like pre-orders, additional items or special services to attract them.
3. Equity based: This model is specific to large scale businesses who offer ownership shares of their company to investors like a conventional public offering. Investors expect returns and shares of the profits in the form of dividends and other financial instruments. Only large scale investors are legally able to own stocks.

Keep in mind that crowd-funding only helps you to gather funds. It does not make your business profitable for you. Many successful crowd-funding campaigns have succeeded only to have the businesses themselves fail because they could not deliver on their promises due to poor planning. In some cases, the business idea wasn’t attractive enough to gather more than a handful of enthusiasts. In short, there is no substitute for hard work.

With that caveat out of the way, I urge you to explore the world of crowd-funding and find that group of loyal customers who will share your passion for your business.

Yes, it is safe. However, one must always be careful before beginning. Crowdfunding is the practice of raising funds to invest for a scheme or a project by collecting capital from large number of people but in very small amounts. It is mostly done by collecting money from friends, families or family members, customers and now through internet as well.

There are crowdfunding websites that assert to provide a platform for small businesses, artists, and investors giving them an opportunity to prove their abilities by raising funds for their activities. The idea has been very popular, but sometimes cybersecurity should be the top concern for users of such websites because of the involved transactions.

If you are looking to do crowdfunding for any of your projects, you must also learn about its security and the risks it may involve.

To make sure, that you have landed to a safe crowdfunding website, look for the SSL connection. SSL is Secure Sockets Layer that can be identified by a little locks with the website URL. And these secure websites always start with “http”. So, before sharing your personal information like name or credit card number, do look for lock and https.

Before making donations, also check for a guarantee policy on the website and read thoroughly the guarantees they offer. Providing a guarantee policy on the website is also a way to ensure security for the users and donors.

Ways of our shopping have changed with the online selling websites. Shopping online is easier and sometimes cheaper and requires us to fill out our debit cards and credit cards details. The process of making transactions through credit cards has been secured by PCI compliance that provides a security standards to ensure safety of the user’s personal information. PCI has many levels of certifications. Only two platforms, Facebook and GoFundMe, have the Level 1 certification.

The crowdfunding greatly relies on trust because it includes the people you know and are close to you. So some crowdfunding companies have dedicated their teams to ensure security and safety of the private details you share and the donations you make.

These platforms are Trust and Safety departments who have taken the responsibility of keeping the technological ways of fund raising safe for people. They work with small money laundering tracking organizations as well as large law enforcement organizations to make sure that people are safe. As not all companies have the sources to afford Trust and Safety department, we suggest to make your donations through GoFundMe, Facebook and YouCaring.

It is a major concern for donors: what if the money gets into wrong hands? If you want to make a donation, make sure that the beneficiary (the person or organization you are donating for) is directly connected to the platform through which you are donating. Staying directly connected to the beneficiary is a way to ensure that money has gone to the right person.

So, crowdfunding is both safe and risky, however, with a few precautions, it can be done securely.

Keeping a good reputation is significant for all corporations and educational or other institutions whether private or government. Maintaining a good reputation for a company is considered essential. It is not important only for large and renowned companies, but is significant for smaller and new starting companies as well. A company will be successful only if it has a good name in the market. Customers will be attracted to a brand if it is known to be well-reputed. They will spend their money on a product or a service from a company they know they can trust and rely on.

By following some simple tips, a newborn company can build up and maintain a good reputation from the beginning.

Be a good analyst

You should make a keen analysis of your products and services, suppliers and contractors, customers and stakeholders. Also know your upcoming competitors.

Keep your word

Do what you promised. If you promised your customers to do something that will be good for them, do it and don’t back out. If something gets in your way to keep your promise then get it done by finding someone who can take your place and keep your word for you. Don’t get a reputation of being a liar.

Building up a good website

You should let your clients know more about what you are and what you do. Best way to do it is online. Keep a well-designed and updated website that attracts clients. It should be easy to navigate and must have a way for the customers to contact you.

Representing through social media

In order to build up a reputation, you will need effective marketing strategy as well. You can build up your public image by publishing ads and blog posts on Facebook, Instagram, Twitter, etc., and keep your audience aware of the goods and services you are providing.

Good advertisement

Promoting your business through a good advertisement contributes to the company’s image. Try hiring a renowned celebrity as a brand ambassador for your company and it will build up a great public image for you.

Keeping a horizon scan

A good way to keep the company going and doing well is to keep a horizon scan. As a leader, one must know the upcoming challenges the company might be facing.

Keep communicating

Let your clients know that you have not forgotten them and keep them updated about the progress of their orders and queries. However, do not email them every now and then to make it look like a scam. Emailing once or twice a week is enough to let them know that they can rely on you.

Building connections

A good company will develop partnerships and alliances to enhance the business. The partnerships can be built up even with celebrities to promote the company.

Get feedback

To make your clients fonder of your services, ask for their feedback. Respond to their comments and reviews and even their critics and let them know what you are going to do to improve. Also be open for suggestions and opinions from clients so that you can improve according to their demands.