The leading Crowdfunding consultancy

Costing a Crowdfunding Campaign

Costing a Crowdfunding Campaign

One of the most common errors in a crowdfunding campaign plan is to miscalculate the cost involved. Getting this wrong can be a major problem because even a successful campaign may not provide you with the funds you need.

There is a reason why our crowdfunding preparation, due diligence and audit process – commonly referred to as TAMP – begins with Targets. One of the key Targets we want to know is “How much do you want to raise?” This is hardly surprising but in our experience the number stated is often either vague or even wrong. Vague is not a crime or even bad as long as you know its vague and not settled yet. Being wrong and discovering it early enough is also not a problem as this can be rectified.

But being wrong and not realising it and running a campaign on a false premise can be a real problem because you might run a successful campaign and then discover all that hard work has not provided you with enough cash to do what it is you have said you are going to do or to pay all the bills associated with your campaign. Don’t fall into the trap of overlooking costs.

Of course the purpose of the TAMP process is to resolve these types of challenges  but we can’t be with all of you helping out, much as we would like to,  so here is a quick guide to the things which often get forgotten.

The purpose of the TAMP process is to resolve these types of challenges

Depending on the type of crowdfunding methodology you are planning to use from donation to equity, each may have greater or lesser relevance to you – but at least you can prompt yourself as you go down the list.I have grouped them very roughly to help you think about some of the key areas costs are incurred.

Rewards
Producing rewards can be costly especially if they are physical items. Materials and time can actually knock a hole in any money raised if this hasn’t been costed in. The piece that is often forgotten over an above the cost of hand embroidering someone’s name into a tee shirt or something similar, is the fulfillment cost. Package and posting can be ruinously costly – do not forget this.

If your campaign is to launch a new product to the market and the reward IS the product but you have yet to take it to manufacture DO NOT assume Alibaba and a Chinese manufacturer will “just be able to do it”. Think  again. Manufacture can be extremely complex, particularly for an innovation. It can take time and several tries to get it right. Specialist tooling is incredibly expensive in the short term. Knowing this is one thing but getting a proper professional assessment of this is very important. there are many really good providers out there that will fabricate a mock up for you and look at the wrinkles in the process. Get that supply chain and the costs associated with it nailed.

Transaction Costs
Platform costs are generally reasonably well understood with most people figuring this out even if there is considerable variation out there amongst the many hundreds of platforms. But watch out for small print and unexpected costs. As Tom Waits would have it – “The large print giveth, the small print taketh away.”

Settlement and payment can be costly depending on who you use and who you bank with. Currency fluctuation issues can also be tricky if you are operating across several countries.

TAX – the recent VAT changes on digital product is Europe DO APPLY to crowdfunding and to digital rewards even if you are NOT VAT registered. This can turn into a big overhead. Also – in the UK – the taxman says your crowdfunding campaign is part of your revenue – they can, and will, tax it.

If you are planning a DIY campaign – it might lower some platform costs but it is rarely free or costless. What extra software might you need to integrate and display a campaign, process your transaction and keep your website safe from hackers?

Professional Services
Some folks do need professional services, so don’t know that they do, and some don’t need them. Recognising you might need some of these more specialist things done is the first step. Then ask “Who will or can do it?” If not you or part of your team it is likely to cost you.

Here are a few examples of what you might face:

  • Who is your lawyer? If you are planning an equity campaign DO NOT leave home without one.
  • Due diligence – getting all those contracts verified and checked to reassure nervous and suspicious  investors can take a lot of time, and specialist review. So “What terms do you have with your suppliers?” for example or “Who does own that property you have?”
  • Intellectual Property – should you protect it and if so how? Are your breaching anyone the IP of someone else? This type of specialist service is not free, and when it comes to protecting IP it can be VERY expensive.
  • Who shoots and edits that fabulous video? Maybe you, maybe not?
  • Who does the photography of your superb new product mock up, and of you and for all the other PR and marketing type activity you will do?
  • Who checks or even writes that compelling copy and PR and who runs that A&B testing campaign to check your messaging?
  • Who will tidy up your books to a level that you can convince a lender or investor to splash the cash? Who will write that business plan?
  • Do you need a better team? Do you need a new Business Development Manager for example to convince the investors? Recruiters and headhunters, in large part, don’t work for free.

Opportunity costs
Whilst you are running this campaign who is running your business?

Who does the day job? How much will it cost in staff time and what is the potential knock on on your business? Will you still be earning money whilst you prosecute your crowdfunding campaign? If not then what will that do to your cash flow?

Now this is not an exhaustive list . Nor is this intended to say “Don’t Do It!!!” Far from it. It is intended to make you think about what might have slipped your mind till now and it says do it well, do it properly, and do it with your eyes open.

Reassess your crowdfunding target now and ask yourself – is it accurate and is it enough?

 

Why not tell us what unexpected costs you encountered in your campaign?

 

 

Monitor, Respond, Update – Components of A Good Crowdfunding Campaign 5

RecycleIn our continuing series of advisory blogs on how to run a good Crowdfunding campaign we address three key activities in any campaign – Monitoring, Responding and Updating

Monitor

It is important to understand what is going on in your campaign so that you can amplify the positive aspects and tailor any aspect to any emerging patterns. So, in simple terms, keep doing what seems to work well and don’t flog a dead horse. To help you with that many of the platforms offer quite sophisticated dashboards that can provide insights on your project. Traffic rates, engagement, referrals etc., and a good analysis of this can lead to continued stream of actions and tweeks designed to improve the campaign. But the platform is not the only mechanism for monitoring the campaign. If you are using multiple communication channels then it is important to review what is happening there and monitor the results of your efforts. Using too many channels will be time consuming and using channels that are not being responded to is a waste of effort. So, for example, if you are sending email campaigns then use a tool that will provide specific insight about its impact. This might show how many people opened the mail, how many clicked on links, or forwarded it, the time of day these things happen. Create tracker tokens for links and see who is sharing and using them. All of this can help you tailor and enhance your campaign as you go. It may even be possible to find the time to compare different approaches and arrive at the best approach from a number of different messages. Build a monitoring framework and keep to it. Set yourself targets and benchmarks in order to measure progress. And be sure to act on what you discover.

Respond

If you are asked questions respond to them and do so quickly. Be open and friendly and take account of what is being said. If people are confused about something then clarify it in your response and check to see if the message needs amending elsewhere. In a reward campaign you may need to amend change or expand the range on offer as you go based on feedback. Platforms have varied rules on these matters but honest amendments responding to community demands are usually okay. In most cases, on reward platforms you cannot change the specifics of a reward once one has been purchased.

Update

Keep people updated. It might seem obvious but one of the great strengths of crowdfunding is that it establishes, or it should, a high touch relationship with your funders. Keep in touch with them and keep in touch with your community generally. Not everyone invests immediately, get them back to do it. Updates make your investors feel engaged, valued and involved. This sense of direct engagement in a project is a key motivator and one of the main principles of digital empowerment so it is a good principle to respect. By doing this you also maintain momentum which is key to a campaign. But this is demanding and time consuming so you should plan some distinctive trigger points prior to your campaign for releasing prepared material. The majority of what you publish will be responding to events, but having materials to hand to keep the campaign alive is essential. An important part of your preparation campaign is to prepare a publishing schedule for your project. This will include scheduled communications and publications, and material prepared ready for specific times, which might for example include announcements about hitting a specific target. Clearly bombarding people endlessly with repetitive messages will become annoying. Be creative, inclusive and informative and do be careful to avoid crossing the “irritating” line.

Remember this process can be prepared for and structured but, in many respects, it is an art not a science and never forget the old adage – we are given two ears and one mouth so listen hard to your crowd!

If you would like to attend one of our Preparing to Crowdfund workshops or some individual advice on your campaign then get in touch

Get the Messaging Right – Components of a Good Crowdfunding Campaign 3

twitterIn the third of our series on running a good crowdfunding campaign we focus on Messaging. Messaging is absolutely crucial. Your proposition must be compelling. If its not then why would anyone choose to fund your campaign when there are so many to choose from? So having a message that inspires, clarifies and explains exactly what your campaign is about and why someone should invest in it is key. A clearly defined goal or project that conjures a vision for investors is very important. But don’t be fooled. This is not a simple process and getting the messaging right, clear and understandable and engaging is hard and precise work.

The messages or calls to action, as some refer to them, need to be tailored to the audiences you are approaching in the first instance. So this may mean different approaches, different styles and different types of appeal. This can be necessary as each may be addressing a different demographic through a different channels and with an alternative perspective on your campaign. On the subject of channels your choice of communication channel and having messaging appropriate for that is important. At its most basic, consider that if twitter is a key tool in your campaign can you craft a good call to action that converts to 140 characters?

Whilst social media are powerful and commonly used tools for a crowdfund they are by no means universally applicable. a social lending campaign for example is less likely to draw on twitter as say a reward campaign, and it is important that you understand what are the best channels for your initial outreach. But, don’t forget the power and importance of weak links and make it easy for connections of your connections to reach out through their channels too.

Messaging is conveyed in the copy of any communications you produce be it written, video or otherwise. It is not uncommon for successful crowdfunders to test their messaging on focus groups and samples of their intended audiences prior to launching a campaign. If you do this ensure you use appropriate non disclosure agreements. This type of thorough preparation will significantly help your campaign.

If you would like to attend one of our Preparing to Crowdfund workshops or some individual advice on your campaign then get in touch

Components of a Good Crowdfunding Campaign 2 – Preparation

bubbleThe second post in our series looking at best practice in running a crowdfunding campaign and today we look at a key component – preparation.

Preparation

It is impossible to emphasize enough the importance of thorough preparation for a crowdfunding campaign. As a rule of thumb you need as much preparation time as campaign time. So if its a 30 day campaign you will spend a minimum of 30 days preparing. Those 30 days might be spread over a longer period and may be shared across a group of people but it will most certainly take that time. However the benefits of doing so are enormous. So many projects fail because they encounter difficulties that could, and should, have been identified and ironed out prior to launch. Once a poorly prepared project is failing in the live campaign time, its very very hard to turn it around.

twintangibles developed what we refer to as the TAMP process and this has been used by many successful campaigns. It is a four stage process that helps someone considering a crowdfunding campaign properly asses their options and, once a commitment to proceed is made, prepare an effective and comprehensive plan for success. The TAMP process includes an assessments of Targets including sums, time frames and intentions. This ensures that a rounded and thorough examination of the motivations, constraints, intentions and fit of the crowdfunding project are well understood. An Audit follows examining what assets, skills and resources are available to run a campaign. This helps us understand what we have to use in a campaign but importantly highlights what we have not and how these gaps might be closed. The Method step follows where the type and nature of the crowdfunding you wish to pursue is defined, along with platform selection. Then we Plan, developing a thorough publishing plan, build our monitoring process, identify our communications channels, tribes, targets and influencers that we wish to reach. Develop and our messaging, prepare our media and allocate resources and responsibilities.

We will look at some of the things in much more detail in the coming weeks but from this brief over view of the process you should see that preparation is a demanding and time consuming thing. But if you do it well you will significantly increase your chances of success.

If you would like to talk to us about the TAMP process, our workshops, coaching and training services then don’t hesitate to get in touch.

Components of a Good Crowdfunding Campaign 1- Run Your Own Campaign

graphAlmost every day we are asked what is the best way to run a crowdfunding campaign, or how to resurrect a failing one. Truth is there is no secret sauce or universally successful approach to running a crowdfunding campaign but there are some good principles that are found in most successful campaigns that you would do well to follow .  Starting today we will begin to publish a series of blogs called “Components of a Good Crowdfunding Campaign”. Each will look at a key aspects of running a good crowdfunding campaign.

Whilst none of these in isolation will guarantee success  they will be good for your campaign and we recommend that  you follow them.

1. Run Your Own Campaign
Don’t let anyone else run your campaign. You will find that there are people who will offer to run your campaign for you – generally marketeers who will pretend that a professionally run marketing campaign is the solution to a successful crowdfunding campaign. Don’t be fooled. Of course marketing your campaign effectively, choosing channels and having the right messaging and copy are certainly key, and a good marketing consultant can help you put that together.

But you must have very direct management and engagement with your campaign. In crowdfunding one of your strongest assets and most potent currency is authenticity. People on the whole invest in people. If your campaign is run by a third party then inevitably an element of that authenticity is lost. Your ability to respond with transparency, clarity and honesty will be slowed and compromised by the mediation of a third party.

But perhaps the most important reason for not using a third party is that if the campaign is managed thoroughly and properly such a service would simply cost too much!

Crowdfunding is incredibly intensive and demanding. It usually requires the full time commitment of at the least one person and probably more depending on the dynamics and scale of the campaign. A full time professional is expensive and would eat up a good deal of your budget or target funding. So, if you are offered these type of services on the basis of a tiny quote or a small success fee percentage of your target then you calculate just how long you will get of that third parties time. The answer is – not enough. If you are offered 24/7 cover for the duration of the campaign you can guarantee that you are not getting a professional – maybe an intern!
So – be hands on. Ask for help? Most certainly. Employ specialist services where you need them to provide expertise that you don’t have? An emphatic yes.

But, if its your campaign, your project, and your company so lead it yourself.

If you would like to attend one of our Preparing to Crowdfund workshops or some individual advice on your campaign then get in touch

Watch out for our next post in this series. Why not sign up for our newsletter or follow us on twitter to ensure you dont miss a post.

 

Page 1 of 212

Contacts

Call: +44(0)7717 714 595

Join Our Mail List

twintangibles Ltd is a company registered in Scotland with company number SC397987. Registered office is Blue Square House, 272 Bath Street, Glasgow, Scotland, G2 4JR

Correspondence Address is:
twintangibles, Blue Square House, 272 Bath Street, Glasgow, Scotland, G2 4JR