If only you could precisely measure the livelihood and success of a niche business idea before adventuring down the path of a business startup, entrepreneurs would then sleep at night.
Many small business startups follow an idea that has been done and find a way to make it different or find high demand, but the entrepreneurs who consume the most risk of the unknown are playing in the niche market. Luckily, there is a playground for them.
Through crowdsourcing, you can market your potential idea, measure the reactions and receive support.
The Statue of Liberty is the first example of successful crowdsourcing, and without the use of the Internet. Our statue sat in pieces in New York in the summer of 1885. This diplomatic gift sculpted and paid for by the people of France did not have a plinth to sit on, nor did the New York governor want to pay for one with city funds. Other cities offered to pay for the pedestal, including Baltimore, in return for moving its location. Our Chesapeake Bay would have been a different experience with the Statue of Liberty.
The publisher of the New York World, Joseph Pulitzer, appealed to Americans for the proper home of the statue. "We must raise money!" Pulitzer's article on March 16, 1885, stated, "Let us not wait for the millionaires to give us this money. It is not a gift from the millionaires of France to the millionaires of America, but a gift of the whole people of France to the whole people of America." In the next five months, over $100,000 was raised through nominal donations, mostly of a dollar or less.
On the Web, there are hundreds of websites to assist the adventuring entrepreneur seeking support by raising capital and gauging idea feasibility. These crowdsourcing websites allow one to market an idea, usually in an informative or entertaining video to grab the interest of a large group of consumers. In exchange for a unique gift or experience, interested viewers will pledge however much money they wish to help meet the funding goal for a business or personal venture.
On most sites, these funds are not awarded to the owner until the goal has been met, making sure a project does not start partially funded and lead to failure.
Using websites such as Kickstarter or Indiegogo does come with a cost. For successfully funded projects, the website service will charge anywhere between 2 to 15 percent of the money raised. On top of that, there is a charge for credit cards, which may add 3 to 5 percent and a fee for wire transfers. This is how the company makes its money while providing an avenue for successful projects.
While setting a funding goal, one will need to make sure these fees are considered, and make sure enough capital is remaining to fund the project. Most ideas appealing to the consumers often achieve well above the goal. The Pebble watch started as a Kickstarter project with a goal of $100,000 and raised over $10 million between 69,000 supporters.
Do you have a business idea and want to test the waters? Meet with the Carroll Business Path and a business consultant to perfect your business and marketing plans.
