Developing a Campaign that Raises Funds on WO Funding Part 1
Planning for Success
One area that people with crowdfunding projects often forget, to their peril, is planning for success. It’s no good to just put up a project and hope that it will raise money just through the power of the Internet. Having a plan in place to actually achieve this is essential.
Preparing a Budget
Many that have projects that they hope to raise crowd funds for don’t even consider preparing a proper budget. If they do, they often forget many of the costs they need to include.
Most people do understand regular project costs, but with crowdfunding other types of costs come into play. For example, there can be platform fees – the cost of using a platform, transaction fees – the cost of using a payment system, and currency conversion fees – the cost of converting currencies if those outside of Australia are attracted to give funds. Not only this, but rewards also have associated costs, not just in their creation but also in getting those rewards to the contributor.
All of these extra “unseen” costs can have an impact on whether it is possible to realistically use crowdfunding to raise money. In particular, your likelihood of reaching your target needs to be assessed. If you reach your target you’ll only get charged 5%, but if you do not, you get charged 8% by WO Funding. This can have a significant impact on funds raised so it must be factored in properly.
Looking at an example helps to illustrate this properly. You may be seeking $5,000 to get a project off the ground, but having assessed your network, it may only be possible to glean $1,000 through crowdfunding. Instead, you may have to look at getting the rest through another type of campaign – perhaps a “Major Gifts Campaign” or another different approach for raising money. There are two approaches that you can use to determine a realistic crowdfunding target. It is important to understand that these only lead to an estimate, not an actual prediction of exactly what you will get. These approaches are now explored in greater depth.
Approach 1: If you assume that 10% of your network (consider all platforms, e.g. Facebook, Twitter, LinkedIn) give an average of $50, consider what you can achieve:
With 500 in your network (280 email contacts, 120 on Facebook and 100 on Twitter) x 10% x average of $50 = $2,500.
Approach 2: This works in the opposite way to the first approach, by examining the average of what you want to get from each person (based on an average of 10% making contributions) in order to achieve your desired end goal. If you want to get $5,000 and you have a database of 500, then:
Divide 10% database (500 friends)
= $100 per person.
Clearly this can help you to see if your target is realistic or not, and if not, it makes sense to revise it accordingly.
Setting a Time Frame
Some people assume wrongly that if you have a campaign of a longer duration then you will raise more. This is untrue. Most crowdfunding activities raise most of their money during the week following launch, and then again during the last week of fund raising. The period in the middle usually experiences a lull in fund raising activities. If you decide to have a longer campaign you will need to work hard on making sure that you can keep interest going in the campaign so that you can continue to raise funds throughout. Often, a shorter campaign is better.
Research has shown that campaigns that run for less than 40 days have the best chance of achieving their financial goals. Of course, you do want to allow sufficient time to be able to reach your entire network during your campaign. The best time frames appear to be between two and four weeks with an extra buffer of two weeks. This is six weeks in total, maximum.