Too many entrepreneurs are placing all their hopes for success on Kickstarter.com or similar websites allowing people to make donations to advance their projects.
Kickstarter and other websites permit entrepreneurs to solicit donations, which are expected to be used for the tasks described on the page. For instance, a film company might use this crowdsourcing technique to obtain money to edit a film it has shot. Only projects obtaining its full request receive the donations, which creates a competition that few entrepreneurs factor into their plans.
While I wish each of these projects success, I also see an alarming trend. Most of these businesses turn to Kickstarter prematurely. Before launching a Kickstarter campaign, entrepreneurs need to have three things in place. First, they need a logical process for how the product will reach the market, including everything from product to shipping to invoicing.
Second, entrepreneurs need a backup plan in case the Kickstarter campaign fails The odds of a project obtaining funding are long: Just 38% of the projects seeking $10,000 on Kickstarter achieve their goal. The percentage drops to 18% for those projects seeking $50,000 and just 7% for entrepreneurs seeking $100,000, according to research performed by Wharton Business School professor Ethan Mollick and social entrepreneur Jeanne Pi.
The third missing component of most Kickstarter campaigns – and the one that can do the most to overcome these odds – is working with a marketing expert to develop a carefully crafted marketing plan, geared to reach ideal customers quickly.
Early intervention, prior to the launch of the Kickstarter campaign, is vital. By the seventh, 10th or 20th day of a 30-day Kickstarter campaign, the marketing challenges become too great. A marketing expert should craft both the content and the timing for every post to Kickstarter, along with all of the social media and other outreach to potential donors.
Yet marketing seems to be the most overlooked piece of Kickstarter planning. Even worse, most entrepreneurs undervalue the need for these services, not to mention the costs associated with this work.
By the way, telling a marketing expert, Help us reach our goal and we’ll pay you with some of the proceeds, doesn’t generate a good result. The fact is that it takes money to make money, even on Kickstarter.
Spending money on marketing a business to Kickstarter or anywhere else is a good investment. Few, if any, entrepreneurs can properly market their business, and unfortunately, the competition for Kickstarter funding requires a laser focus. Early marketing help can overcome several problems for entrepreneurs.
A marketing expert can temper the entrepreneurs’ overestimate of the public’s actual interest and desire to support the Kickstarter campaign. A marketing expert can combat the entrepreneur who projects his or her enthusiasm on people who just don’t care that much.
Entrepreneurs use faulty math. The fact that he or she has spent hundreds of hours looking for the perfect materials or color scheme for the product does not equate to full funding for Kickstarter. Entrepreneurs tend to mirror the homeowner who adds $20,000 over market value to reimburse him for his sweat equity accrued in updating the kitchen or the bathrooms.
Another problem, at least in a few cases, is that entrepreneurs consider a Kickstarter campaign easy money. Just post a campaign, tell your Facebook friends and watch the money flood in. However, that just doesn’t happen often, and when it does, it is the exception, hardly the rule.
Kickstarter’s name suggests that it’s role is to re-ignite something that started in the past. Kickstarting a car is restarting it, not starting it. To restart something suggests that everything was in place for it to work and that it worked once before. It just needs a kick.
While funding of an entrepreneur’s project is certainly a kick, success is dependent on that project having virtually everything in place. But if you look at the list of projects seeking funding, the majority are seeking dollars that will be used to figure out how to reach the market. Even worse, many entrepreneurs, in their quest to obtain funding, add more and more enticements – an autographed copy of the first product, a first edition, and on and on – not realizing that the more they commit to, the less they will have to actually spend on what will help their idea reach the market. It’s a dangerous Catch-22.
Entrepreneurs should consider obtaining funds through Kickstarter and similar websites the equivalent of receiving a blank check from a distant relative. It happens, but not nearly as often as people want to believe. Those business owners who recognize this reality are the true entrepreneurs, for they have plans that allow for them to raise funds through several channels.