How should I use crowdfunding money for my business?

When you have a great idea for a business, the first thing you want to do is, get that idea out there. Startups are the future of the economy and a great idea can evolve into a very successful startup. That is of course, if you, as an owner and the inspirator of the idea, are ready to do everything it takes to secure a strong capital that will allow you to start your business.

Lack of capital is a major problem and usually the reason why most startups don’t actually ever see the green light. The reason why startuppers get frustrated and quit before they even begin. A good cash flow could stop all of that. But where will you as a startupper be able to find the money to make your dreams come true? Who will trust you and your idea enough to help you make it a reality?

Well, you do, in fact, have many options when it comes to finding the money for your business. As it always is, you could start by asking for help from the people closest to you. Your family or a few very close friends that could help you and believe in your idea. And you could actually end up with a sum that could help you out in the beginning. Your company, however, cannot be completely supported and funded by your family unless of course they, themselves are rich.

This option can only support you for so long. You will need more. Larger cash flow that will keep your business going for as long as it needs until it starts making a significant profit on its own. But what if that takes a very long time? Or worse what if you need a bigger capital to generate more profit? This is where the option of alternatives comes in and it is the kind of option that every aspiring startupper needs to have.

Of course, every aspiring startupper already knows the best solution when it comes to cash flow for their business, is crowdfunding. Crowdfunding is the way for people to tell you that they like your idea and that they want to support it. Apart from the money that you can gather through crowdfunding you also get the satisfaction that your efforts have been acknowledged. This is a great boost for your confidence and certainly a great addition to your current capital.

You have already thought of crowdfunding of course and you already started. You added your business to some crowdfunding platforms and you now see that there is a steady flow of cash from all of your supporters. All that money will be more than enough to help you with your business. You will be able to purchase the equipment you need to start building your products or offering your services. You will be able to hire employees and get started. But how do you get started? What are the steps you are supposed to take when using crowdfunding money to advance your business? This is the million dollar question and by answering it, you will be able to set up strong foundations for your business and use the crowdfunding money, the right way. Let’s take things one step at a time.

Step 1

Use your business plan. Most crowdfunding platforms inform you that yes, you can add your business but without a solid business plan, there is a pretty good chance you will not be getting any funding. This is why you should always have a business plan before you go into any crowdfunding platform.

This is the same business plan that you will need to use as a guideline that will tell you exactly how you will be using the money from your crowdfunding platform.  So take your business plan in front of you and start separating it into categories.

Step 2

Start with the basic. Every company has steps that are supposed to be taken. But every company needs something very solid before everything starts. Companies need to be legal. Everything needs to go according to the law. Otherwise, you could end up with a large debt or worse a record sheet simply because you did not pay enough attention in the beginning.

You need an accountant to take care of the financial papers and a lawyer to help you with all the legal processes. This is where you should start spending your newly acquired capital. Getting everything ready and know that you and your business are 100% legal. Not having to face these types of problems will make the process of building a company a lot easier.

Step 3

Start with multitasking employees. We are not, by any means, suggesting that you should hire a team of 3 people to do the job of 10 or 15. What we do however suggest is, you set your priorities regarding your employees. It is not a smart idea to hire 10 people straight away. Mainly because you cannot be completely sure you need them all.

You should start by hiring a basic number of people capable of running your business in the beginning. After that, you can see what services you lack and start hiring. This way you will be able to control the influx of human resources and keep the optimal number that will keep your company running the easy way without burdening the employees or giving the company extra expenses.

Step 4

Choose your equipment carefully. The kind of equipment you will need usually depends on the kinds of products or services your company produces. But no matter what there are certain pieces of equipment that are necessary for every company. Your computers for example. These are mandatory pieces of equipment that you will need to get and pay good money for them.

Other equipment, however, does not have to cost so much money. If you are going to get it anyway. For example, if there is a particular type of equipment that you will really use, why purchase it if you can rent it for a short amount of time? It will cost less, help you do your job and you will avoid maintenance costs. This can be a very good choice for you.

Step 5

Marketing will require a big part of your original capital. And it is the kind of money that you will not want to think about paying. Marketing is what will bring your company out there for the world to see. No matter what you do, without marketing your business will not move forward. So make sure that you will always keep money on the side that will go to marketing.

Remember that marketing is a very big and very important part of branding. You need your company to have a good marketing and branding strategy. These strategies will be what brings money back to your business. Or at least a portion of that.

Handling large amounts of money is never easy. Especially not when it comes to your own business. You need to do this carefully. You do not want to see your capital disappear. Start by finding the right crowdfunding platform and register your business. Get your capital and start following the 5 steps mentioned above. That way, before you know it, your business will be ready to launch and bring in the profit and success that you have been dreaming about! The choice is yours so make sure that you will choose correctly!

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Thodoris Alexandrou
Chief Operating Officer

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