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Crowdfunding your independent business: will it work for you?


crowdfunding


Crowdfunding online can be a quick and successful way of raising cash, but it can be hard to get it right.

Last week, restauranteur Gary Usher smashed his £50,000 crowdfunding target to launch his fifth restaurant, Pinion, in Merseyside. After offering rewards such as food vouchers to spend at the restaurant, masterclasses with the head chef and opportunities for backers to have their name etched into the walls, Usher’s Kickstarter page reached its target in just one hour and is now sitting at a healthy £86,600. And that’s not all! Usher’s first crowdfunding campaign for restaurant Burnt Truffle raised £100,000 in 2011. He successfully crowdfunded two more restaurants before his fourth campaign, for Wreckfish in Liverpool, reached a whopping £200,000. It’s currently believed to be the highest amount raised for a restaurant through crowdfunding in the UK.

So, what’s it all about?

Crowdfunding online can be a quick and successful way of raising cash, but only if you get it right. Sites such as Kickstarter, Crowdfunder and GoFundMe allow business owners, project leaders or anyone with an idea they believe will make a difference, to create a pitch and offer rewards to those who pledge small amounts of money to help make it happen.

Of course, campaigns like Usher’s are in the minority, and just scrolling through the Food and Drink category on Crowdfunder shows hundreds of ongoing campaigns for craft breweries, local cafes, vegan taste boxes and even a food allergy alert website. Chances are, many of these are not going to make the money they’re asking for. And the big catch? If your crowdfunding campaign does not reach its target amount in the allotted time, no matter how close you get, you won’t receive a penny.

Is it the right method for you?

Crowdfunding sites are open to anyone, so matter how big or small your project, there is a chance you can raise some money through these sites. However, much of the success of crowdfunding lies in the investment in your whole brand by backers. This means if you’ve already established who you are as a business and begun trading to happy customers, you’re far more likely to attract backing as there are many who already know who you are. Businesses with little to no experience rarely achieve targets as they may struggle to demonstrate the experience and professionalism required to convince backers that their project is worth investing in.

If you’ve been running an independent business for some time and are looking to expand into a new unit or even a fixed site premises, crowdfunding could be a viable option. Start the conversation with regular customers and locals and ask them if they’d be keen to give your business a little financial support and find out what rewards they’d like to see in return.

Crowdfund the right way

Crowdfunding can be a viable option for food businesses, but follow this advice to increase your chances of success:

Be realistic with your target
Calculate exactly how much money you need to raise to achieve your goal and stick to it. Backers want to see where their money will go and pitching your cause the right way can even lead to overfunding, meaning by being conservative with what you ask for, you may receive far more than your target amount.

Demonstrate your project or business professionally
Miss-spelled titles and bad grammar, pixelated cover photos and a casual attitude on your crowdfunding page will quickly put potential investors off. Make it slick and attractive and show some character. People want to get behind a person or team with a real cause, not an anonymous page that’s just like all the others.

Be creative with your rewards

Some campaigners offer equity of their business in return for pledges. Others offer various meal or drinks packages depending on how much a backer offers. Like Usher, you could offer masterclasses or the etching of each pledger’s name on the wall of the business, but whatever you choose to offer, ensure that it is relevant to your project and will be attractive to many different types of people.

Get the word out

Share links to your crowdfunding page across your social media and company website. Ask family, friends and loyal customers to spread the word too. The more people that hear about your project, the greater chance you’ll have of hitting your target.

Have a back-up plan

You may not reach your target amount, so preparing for disappointment is essential. However, this may not be all that comes as a result of a failed crowdfunding campaign. Your business could be affected by lack of interest from backers online and the last thing you want to do in your quest to expand is lose what you’ve already worked hard to achieve. Although crowdfunding may seem like an easy option, it may be worth looking for other funding options elsewhere in case it falls through.

Vegan restaurant The Vurger Co. began by trading at markets and sharing their menu at pop-up restaurants. They raised funds through Crowdcube, reaching their target of £180,000 after just 24 hours and hitting £300,000 after 77 hours. They used the money to open their first fixed site restaurant in March 2018. Their advice?

“Crowdfunding is not an exact science, but we definitely feel there’s some things we did really well which helped the campaign massively.

Prior to our crowdfunding campaign launching, we spent a year getting out there and building our brand. We did all sorts of markets, events, festivals and pop ups, often sacrificing profit for exposure, all in an attempt to focus on building momentum. As well as building momentum, it gave us an opportunity to refine our products and our processes, so that whilst we were building the brand we were also learning so much about what works and what doesn’t. This meant that by the time we launched, the excitement and buzz around the brand was already quite strong.

We also planned loads of marketing events prior to the launch to help spread the word about the campaign and again this helped to make sure it launched with a bang. We also spent several months prior to the campaign speaking to investors and taking them through our plans, so that when the campaign launched, they were ready to go and help it to have momentum from the start.”

Crowdfund the right way

Kickstarter - one of the most popular crowdfunding pages; list your food business in the dedicated 'Food and Craft' section
Crowdfunder - UK based site; the 'Food and Drink' category is the place to start
GoFundMe - often used by individuals, this site could be good for smaller projects
JustGiving - usually reserved for charity fundraising, this site could apply to business ideas that involve underpriveleged individuals or environemntal projects, etc.



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