Crowdfunding is a powerful tool for small business growth. It can be used to raise capital, create marketing buzz around your company, and even gain customers. And now thanks to Regulation Crowdfunding (Reg CF), you don’t have to be a creative product creator or project manager like you used to in order to access this type of financing. Here are some ways Reg CF could help your small business grow:
There are two types of crowdfunding: reward-based and equity-based. With reward-based crowdfunding, you offer people something in exchange for their monetary support (like a copy of your book or CD). Equity-based crowdfunding means you give away some ownership in your business and/or profits in return for investment funds. You can choose which type suits you best – there’s no wrong answer!
If you’re an entrepreneur in a regulated industry and are having trouble finding funding, Reg CF can be an alternative to more traditional forms of financing.
Reg CF is a new way to raise capital and it’s opening the door for you to a whole new world of customer acquisition and financing.
You can raise up to $1.07 million in a Reg CF offering, which is significantly more than what you can raise with a Regulation D or Rule 506(c) offering. You can raise money from non-accredited investors (up to 35) as well as accredited investors ($200k+ annual income).
You can also use Reg CF to secure your next round of funding from friends, family, and fans by creating an equity crowdfunding campaign on Fundable’s platform and empowering them with exclusive content that they will love!
Reg CF is a great way to raise money from investors without giving away equity. It’s also an excellent option for companies that don’t have much in the way of assets or profits.
Some other benefits of Reg CF include:
You’ll be able to use Reg CF to test the waters with a small investment and then scale up if it works. This is similar to how Amazon does things: they launch their product on their website, offer free shipping, and then see what happens – if it works well, they start expanding into other markets.
A few common questions that come up when trying to crowdfund for this type of effort include: How do I find the right location? What equipment should I purchase? How do I get employees on board and trained? How will I attract customers?
Luckily, there are tools available that can help you answer these questions and more—from market analysis software like Nielson to customer relationship management (CRM) platforms such as Salesforce.
Online sales are continuing to grow faster than brick and mortar sales, with digital commerce actually outpacing traditional retail by 2X, according to the U.S Department of Commerce.
Crowdfunding is a great way to test market demand for your product or service, and also how much you can raise through crowdfunding. If you’ve proven your concept on the crowdfunding platform, then it’s time to scale up production and inventory so that you’re ready to fulfill orders when they come in.
This is where Reg CF can help. In exchange for funding your company’s growth through fixed asset purchases (FAPs), investors can earn a return on their investment and benefit from increased sales over time.
How much money can be raised through FAPs? The maximum raise allowed under Regulation Crowdfunding is $1 million per year per issuer with no more than $50 million in outstanding capital at any one time—so while it may seem like a lot at first glance, it’s not enough capital to fund massive projects like building new factories or acquiring entire companies! This means that unless your business needs only minor upgrades such as computers or office supplies, Reg CF probably won’t be able to meet all its needs through FAPs alone; however, depending on how quickly production capacity increases after those initial investments have been made (which could be anywhere from weeks up until years), there may still be room left over within these limits once everything else has been taken care of thanks to what we’ll talk about next:
The best time to scale up manufacturing is when you have a product that can be produced in large quantities and a manufacturing process that can handle those volumes. Many small business owners find themselves in this position when they outgrow their limited production capabilities, which are usually based around handcrafting or small batches of items. This is when you may need to buy new equipment, like an industrial sewing machine or an industrial laminator, which costs thousands of dollars each.
In addition to these large purchases, you also need to consider paying for the labor needed for large-scale production. If you’re making 10 units at a time now and want to make 100 units next year, then hiring someone part-time might not be enough—you’ll likely need staff members who work full-time on your project (and will thus cost more per hour).
If you have a business model that can be replicated and scaled, this is the perfect time to introduce a new product line or service offering. You’ll need capital upfront for equipment, marketing campaigns, and additional human resources (or software). Using Reg CF through SeedInvest allows investors to fund these types of projects while earning tax benefits and equity in your business.
You could also use Reg CF as an alternative way to finance expansion into new locations or markets, allowing you to grow without having to do all the legwork yourself!
Advertising is one of the biggest costs associated with growing a business, but it’s also necessary to get the word out about what you offer. Advertising can include print ads, social media, TV commercials, radio spots, billboards, and more.
Crowdfunding sites like Kickstarter or GoFundMe are known best for projects where people donate money in exchange for an early version of the product being developed. But crowdfunding can also be used as a way to prove market demand for your business—and show investors that there’s enough interest in what you offer that they should invest their own funds into it as well.
The crowdfunding rules were approved by the Securities and Exchange Commission (SEC) in 2015, and they went into effect on May 16, 2016. As of today, there are over 1,000 different companies conducting Regulation CF offerings; this number grows every day as more small businesses discover how easy it is to use Regulation CF to get funded for their growth plans and ambitions.
You may have heard about crowdfunding before and the information we have provided may have filled you in—but to break it down simply, here’s what you need to know: Crowdfunding means taking an idea or concept from the conceptual stage all the way through production and distribution without any external funding or investment until you’re ready to launch at full scale. With traditional crowdfunding platforms like Kickstarter or Indiegogo, your backers are donating money without expecting anything in return; they’re simply contributing because they believe in your project enough that they want to make it real. But with Regulation CF offerings under Title III of the JOBS Act (the law that legalized equity crowdfunding), investors get something in return—typically shares of ownership or debt instruments such as bonds issued by your company (or both).
Regulation CF is great news for entrepreneurs who want a simple way to raise capital for growth but don’t have access yet through traditional channels like banks or venture capitalists because those options require complex paperwork processes that take months if not years from the beginning application until approval.
If you’re still on the fence about Regulation CF, consider this: as long as you have an idea and a plan for how to execute it, Reg CF can help you get your business off the ground. If your company falls into one of the categories listed above, there’s no reason why you shouldn’t explore this funding option! We hope this article has given you some insight into what crowdfunding is all about and how it could work for your business. If you have any questions or want to explore marketing strategies for your business, feel free to contact us at Reversed Out Creative.
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