Let’s talk about the other “secret” to running a successful crowdfunding campaign. This is actually even more important than the first “secret” I wrote about. This secret has to do with all the things about running a crowdfunding campaign that happens after you have raised the money, but that must be planned before the campaign page even goes live.
The most important secret to a successful crowdfunding campaign is this: You have to be sure you can create what you say you are going to create and that you can do it on time and on budget.
This means that before your campaign page ever goes live, you need to have a hard quote from a manufacturer confirming that they can create your product, and at what price per unit if you order in particular quantities. You also need the hard numbers on what it is going to cost to transport your product from a manufacturer and get it distributed to all of your backers across the world. Freight and shipping are expensive and you need to account for them when you are planning your campaign. Many Kickstarter creators have been surprised by the high cost of shipping after the fact. Don’t let that happen to you.
You also need to know any other costs that you are going to incur after the Kickstarter campaign to complete your project. Even though I believe the Kickstarter project needs to be 95% complete before the crowdfunding campaign launches, there may be some additional items that have to be taken care of after the crowdfunding campaign concludes, especially if the campaign is being used to raise money for those production costs as well.
If you do not have all of these numbers in your hand and you run your crowdfunding campaign, the problem will not be that you don’t hit your funding goal. The problem will be that you do hit it. Because, once you have hit your goal and the campaign closes, you have made a commitment to creating your product and completing your project. If you realize only after the money has changed hands that you have no idea how to do it, or have no idea how much it is actually going to cost to complete, you are not setting yourself up for just a failed crowdfunding campaign, you are setting yourself up for actual crowdfunding catastrophe. It does not take much to find the stories of people online who experienced tremendous hardship because of an ostensibly “successful” crowdfunding campaign.
As an example, I was talking to someone recently who had developed a product. He now said he wanted to raise $30,000 through crowdfunding. I asked him how much his product cost to manufacture. He said he thought it would be between $25 and $30. He also didn’t know the minimum quantity that a manufacturer would require him to order. This should already be a red flag. He does not have a sufficient understanding of the realities of getting his product from the idea stage to physical creation and out to his backers.
I work with a lot of manufacturers whose minimum order quantity is 1,000. If we are talking about a minimum run of 1,000 of his product, then we are talking about manufacturing alone costing between $25,000 and $30,000. If he raises $30,000 and it costs $30 to produce each unit, he is already not even going to have enough money to pay the manufacturing cost. This is because most crowdfunding platforms take about 9% in fees off the top.
So, right from the very beginning, we know that he doesn’t have enough information to go forward. If he goes ahead and launches his campaign anyway, the best thing that can happen is for him not to reach his goal.
Running a Kickstarter or other crowdfunding campaign is a lot more like running a business than many would-be project creators would like to believe. When you couple the need to built a large and robust following for what you are creating with all of the “back end” know-how of product manufacturing and global distribution, you are talking about becoming proficient in a large number of skills. Learning all of that in addition to knowing the art behind creating their product is what creative entrepreneurs agree to take on.
So, the “real secret” to running a successful crowdfunding campaign is knowing everything about getting your product made and out to backers after your campaign has raised the money it needs. Although we always like to talk about the raw number a particular crowdfunding campaign has raised and bigger numbers are seen as “better” numbers, this is another reason why that may not be the case at all. There are plenty of campaigns that have raised lots of money, but the creators became victims of their own success because they were not well prepared for everything that came after the campaign and it ended in disaster.
If you need more information on crowdfunding, I recorded a complete one-hour seminar about what it really takes to raise $20,000 on Kickstarter. If you are thinking about raising money in that way it will be extremely valuable to you.
What other “secret” is there to running a successful crowdfunding campaign?