Crowdfunding has dramatically changed the way that businesses and creative projects are able to get cash to get started. But most people don’t know how to get started or how to get people to sign up and give them money.
It’s new, it’s different and it’s a little bit complicated. I’ve helped a few clients to get crowdfunding and it’s a very different process to going to your bank for a loan. You could be the right person to help people run a successful campaign.
I like this business idea because it’s an opportunity to get in on a whole new area. Help people who don’t know how to do something they need to do in business (which of course I always love) and earn good money from it. This is a sample idea for a new business from my New Business Ideas Collection, where you can get a whole bunch of ideas for new businesses. Check it out, and let me know what you think of this one.
Want to listen to the audio version of this recipe?
Here’s the audio version of the full recipe for being a crowdfunding consultant.
How it works
First, you have to learn everything there is to know about crowdfunding. Even if you’ve already used crowdfunding for projects. There are lots of different platforms out there, and the whole scene is changing all the time.
Then you decide what you can help people with. I’ve been helping people with testing the ideas they want to get funding for and writing business plans to prove that these ideas will work and turn into profitable businesses. That’s one part of the process, but there are lots of other parts as well.
There seem to be a lot of PR and social media people offering to help create buzz around a campaign. That might be your skill-set. Or you might be a video maker who can offer this as a specialism. Having a promotional video will definitely boost a campaign. Or you might be good at running the numbers and advising people how much equity they should offer or what rewards they should give to people who sign up.
Or all of the above – you could go full service, maybe just outsourcing the video and graphics production.
You develop a great website to show off your offering and set up shop. You find a couple of pilot projects which you can help. Maybe a local charity with an eye-catching campaign they’d like to fundraise for, or a business you know that could do with some capital for expansion. And you do a couple of projects, maybe more, on a success fee basis. If you help them to raise money, you get a percentage. If they don’t meet their targets, and so don’t get funded, you get nothing.
You write these up as case studies. Write a lot of helpful content to advise people on how to run a campaign. You make a lead magnet to encourage people who are interested in crowdfunding to sign up to your emails. Then write a great email autoresponder to deepen your relationship with your potential clients. Give them lots of tips and advice, facts and figures, and stories about crowdfunding. That means that you’re emailing your potential clients at least once a week, probably more often.
And then you get your first customer enquiry. Agree what you’re going to do for them and what you’re going to charge them. You’re not going to work on a success fee basis; that was only for the first pilot projects.
Cost the project
You’ll need to cost up the project, work out what you’ll need to pay subcontractors, and how much time it’s going to take. But set your pricing according to the value to your client (if you want to learn more about pricing, there are tons of tips on this in my blog, or I can help you directly to firm this up).
If your client is going to raise £50k, she’s not going to pay you £10k to help her. If she’s going to raise money to finance the first batch of a new product, which is really common, and she’s giving rewards of sample products out to people who invest. She’ll have less money to pay you with because she’ll be spending all the money she raises on the products.
But if she’s raising £3m, it’s going to take more work to get that amount of money, and you can charge her more money. Cross-check your pricing with the number of hours you’ll need to spend doing the work.
How much does this cost to get going?
This isn’t a particularly expensive business to set up. You’ll need a really nice looking website, but it can be quite simple, maybe with a video of you explaining how your service works. I’d probably invest £3k on the website.
The expensive part of getting this business going is that it’s going to take a bit of time for you to get your first client. Then you’ll have to wait until the funding period is over before you get all of your fee paid.
It could take six months or longer before you get any money in. You need to make sure that you’ve budgeted for enough money to eat and pay the rent during this period. If you’re working to pay the rent during the setup period, it will take longer to get going than if you can work on this eight hours a day.
Who is this good for?
This is good for people who love business, like helping people, and love learning about a new area. It’s a consultancy type business (but one with a very specialist offering which means you can charge more money for your services).
Consultants come in all different shapes, sizes and personality types. You might be a very introverted person who loves to get deep with the analytics and measurements, treating the campaign in a very scientific way. Or you might be an extroverted PR type who will pound away at the keyboard to get the message out to the maximum number of people.
You might be someone who has run a business before. Or you’ve done other kinds of fundraising or investment. Maybe you’ve worked in a bank and have analysed loan proposals? Or you might be a PR professional who has noticed that the PR industry has hit its sell-by-date now, and you want to get into something different. Or you’re a business analyst, or business plan writer, who wants another string to your bow.
What skills will I need to be good at this?
You need to be good at writing content as this is the way that you’ll attract customers. If you’re not good at writing content, either think again about this idea or budget to pay someone who is.
You probably have to be quite geeky about learning the new stuff, because crowdfunding is quite new and the rules are being rewritten all the time. You have to be someone who can sit down to learn how it’s all working on the ground.
If you’ve worked in investment or finance before, this can be a bit of a disadvantage to you, because you’re more likely to make assumptions on how the game is played than someone who is completely new to it.
And the same is true of someone who has worked in PR. I’ve noticed that some of the crowdfunding consultants out there already seem to be working solely on the basis of sending out press releases and banging out tweets. But a much more holistic approach is needed to get lots of people to get their credit cards out.
What’s the trick to making this work?
Learning. Learn everything you can about successful funding bids, read everything you can about crowdfunding and then try it yourself with the pilot projects. Don’t be tempted to bypass the pilots because this is where you will learn the most. And you will definitely need some portfolio pieces to persuade people that you can help them.
The second trick is about pricing. This is a great opportunity to create a very nice consultancy business with a steady flow of clients who want your services. But don’t be tempted to undercharge or cut your rate for people who don’t have money to pay.
You should be looking at a day rate of at least £600 and probably more, depending on the areas you’re able to help with. And whether you can convince the people who are raising substantial chunks of cash that you’re the right person to help them.
How much money would I make?
If you operated this as a one-person business, outsourcing some of the parts you can’t do yourself, I’d expect you to turn over about £80-120k once you’d got going. And depending on the outsourcing, this could be a net profit for you before tax of around £60-80k.
If you then expanded this to a small boutique business, with four or five staff, particularly helping you to reach out to the different campaigns, you could be looking at a turnover of £600k and some nice profits of around £150k.
- Just do one element of the crowdfunding and stick to that.
- Help people to get the crowdfunding and other funding as well, such as traditional bank loans. Banks love to lend to companies which have some other funding or investment.
- Get your customers to come back for the second round of funding, so they pay you twice.
- Only help people who are looking at bigger investments, say £1m+.
- Only help people who are raising money for charities or social enterprises. There’s less money in this area, but it could be a very rewarding way to work.
- Rather than set up shop in a particular location, run your new crowdfunding consultancy from anywhere in the world, but concentrate on the US or UK markets. This business could be very well suited to someone who lives in India, for example, but you can get clients in the US or UK. Or you might be a digital nomad, and live in a different country every few weeks.
Other things to remember
Different countries have different rules about crowdfunding and the legal requirements are very confused because it’s new. Check that this kind of funding and therefore your helping people to do it, is legal in your location and that you understand all the rules. I wouldn’t want you to start something which is illegal where you live.
More business ideas like this one
If you’re looking for a new business idea, I’ve got lots for you. I know how hard it is to find that gap in the market, the business idea which is going to really work in practice. I’ve written up guides to dozens of business ideas and packaged them up for you to choose from. Take a look and tell me what you think.