Crowdfunding has quickly become a popular method by which to raise money for a variety of projects and startups, including independent designers and accessories brands. A cursory look at any crowdfunding website and you’ll find emerging fashion talent seeking support for their latest collection, cause or innovative concept.
Everything from inventory and advertising campaigns, to design ideas and new clothing store franchises, have been and can be covered by some type of crowdfunding project. This means that the method is gaining further popularity and being utilized more often in the fashion industry, especially as the relationship between small businesses, banks and the federal government become strained in the wake of chronic economic problems.
But with increased awareness of crowdfunding as a means to gain capital, more and more companies are attempting such campaigns, and failing due to a variety of mistakes and misconceptions.
Crowdfunding is not a silver bullet and certainly not a get-rich-quick mechanism, especially as more fashion media refuse to cover Crowdfunding campaigns of any type. Instead, these type of campaigns require a significant amount of pre-work and promotion. Without, the money simply won’t flow in.
If you want your crowdfunding project to succeed and not fall into the 60-plus percent of those that don’t reach their fundraising goals, you need to do your homework up front.
Begin by covering these four misconceptions about crowdfunding:
1. Crowdfunding is free money
At a basic level, crowdfunding is a marketing campaign. Particularly when that campaign is in support of a store opening or clothing line, it takes lots of preparation, an effective launch and continuous work and follow-up to get the desired results. If you aren’t able to put in that work, then the odds of you reaching your goals (or making any money, for that matter) are slim to none.
2. Anonymous people will donate large amounts
Most, if not all of your donations will come from family, friends and those who are familiar with your store and products. Having a random person come along and drop a ton of money on a project can happen, but it’s exceptionally rare and shouldn’t be counted on as you go into your campaign. Additionally, casual customers shouldn’t be relied upon to be big time donors. Instead, you’re looking for people who share the same interest in fashion that you do, and support your long-term goals and mission statement.
More often than not, that will be close friends and family, whether you’re in the fashion industry or otherwise.
3. Meeting a fundraising goal is the norm
It would be nice if we could say that most who start a crowdfunding campaign reach their fundraising goals in a reasonable amount of time, but unfortunately, that’s rarely the case. If a campaign does reach a said goal, it’s because of a lot of hard work, time and effort that has been put into the project from a marketing perspective. And, it’s actually more unusual to see that kind of result than it is to see projects that have fallen woefully short of their goals.
4. People will connect based on the product alone
It’s true that you will get responses based off of interest and enthusiasm about your product, but you’ve still got to raise awareness and let people know that it exists. The “build-it-and-they-will-come” mentality doesn’t work. People first need to know about what you’re trying to do, before they can even decide whether or not to invest in it.
So, if you’re trying to fund a unique new clothing line, tell the emotional story of the designer, the inspiration and take your prospective funder behind the scenes before you ask for donations– otherwise, you won’t be able to count on receiving much support.
Even under ideal circumstances and doing all the right things, it’s tough to run a successful crowdfunding campaign in any industry. Make sure to take advantage of the free resources and support available to you through your platform of choice, and get in touch with those who have run successful campaigns to for their tips and suggestions.
Camille McClane is a freelance writer and online entrepreneur living in the Los Angeles area. Working with CrowdFunder has helped her gain more knowledge as to how she can take advantage of crowdfunding to ultimately start her own business one day, and she encourages other entrepreneurs to consider crowdfunding as an option as well.
Photo Credit: Kris Kesiak Photography