How To Use GoFundMe To Fund A Business In 8 Steps
With over $5 billion raised on the platform since its inception in 2010, GoFundMe has a reputation for helping to cover the costs of personal emergencies in a world where most of us are just one missed paycheck away from ruin. But while the company has become synonymous with charitable crowdfunding, you might not realize that GoFundMe can be used to fund a business as well. Want proof? Here are the categories you can choose from when creating your GoFundMe campaign:
Now, don’t get me wrong: If your entrepreneurial venture is a high-tech startup with exponential growth potential, or if you’re creating the next tabletop gaming sensation, you’re going to be better off going with a more commercially-oriented crowdfunding platform such as Kickstarter or Indiegogo. Or perhaps you could try out one of the new equity crowdfunding sites that have popped up in recent years.
However, for the right kind of startup business — preferably one with a local/community focus and with a compelling story to tell about overcoming adversity — GoFundMe is an attractive fundraising option. One big reason? GoFundMe charges no platform fee to individual campaigns launched from the US, UK, and Canada. The typical crowdfunding site takes 5% of what you raise.
I’ll give three real-world examples of people using GoFundMe to fund a business and finding success:
- Two Detroit students raised $3,000 to fund their socially-conscious waffle cookie company
- Owners of a San Francisco restaurant raised $50K to get out of debt
- A veteran raised $2,000 to start his motorcycle repair shop
Read on for the eight steps you should follow to get money from GoFundMe to start your own business.
Table of Contents
- 1) Make Sure Your Business Is Right For GoFundMe
- 2) Develop A Business Plan & A Realistic Funding Goal
- 3) Offer Multiple Reward Tiers
- 4) Refine Your Campaign Pitch
- 5) Seek Support From Friends & Family Before Launch
- 6) Market Your Campaign Via Social Media & Email
- 7) Keep Everybody Updated After Your Campaign Launches
- 8) Stay Engaged With Your Backers Post-Campaign
- Final Thoughts
1) Make Sure Your Business Is Right For GoFundMe
Before you go about using GoFundMe to start a business, consider whether your startup is a good fit for GoFundMe. Many of the startups currently using crowdfunding to great effect are in industries that thrive on platforms such as Kickstarter (as mentioned above): makers of apps, gadgets, and games who typically don’t have an offline presence in the form of a restaurant or shop. Likewise, Patreon has become a leading crowdfunder for podcasters, musicians, graphic artists, and other creatives whose work easily disseminates online.
Crowdfunding with GoFundMe is a different matter, however. Donors tend to contribute to GoFundMe campaigns not to get in on the latest tech trend or trendy tabletop game but to make a positive difference in the life of people in need or to benefit their community as a whole. Look at the sort of businesses that have had successful GoFundMe campaigns, and you’ll note that they typically feature some combination of a) a business that has a positive impact on public life in a community and b) an entrepreneur/business owner with either a sympathetic and compelling personal story to tell or a mission that’s related to charity or social justice.
If neither a) nor b) applies to you and your business then you’d be better off seeking funding from one of the other crowdfunding outfits I’ve mentioned. If at least one of the two does apply to your efforts, you stand a decent shot at making GoFundMe work for your business.
2) Develop A Business Plan & A Realistic Funding Goal
Have a business plan ready before you start publicly campaigning for money. In particular, make sure you set a funding goal that you expect to be able to meet. Define exactly what it is that you plan to do with the money you expect to raise so that in the event you reach your funding goal, you know what to do next.
Of course, all the best-laid plans on Earth won’t help you if you don’t manage to raise any money. One way to increase your chances of crowdfunding success is to offer cool rewards to people who donate to your campaign.
3) Offer Multiple Reward Tiers
Remember when I said that GoFundMe donors are motivated mainly by the desire to do good? While this may be the case, you’re still competing for the limited attention of donors with all the other campaigns listed on the site. That’s where rewards come into play.
With GoFundMe, as with Kickstarter and many other crowdfunders, you can offer multiple levels of rewards to those who contribute to your campaign. This means that you can offer increasingly higher-value rewards to people who donate larger amounts of money. My advice would be to take advantage of this crowdfunding feature and offer multiple reward tiers to your would-be donors. Give people a reason to feel invested in your success!
While branded trinkets and t-shirts might draw some people in, rewards that give people a taste of your product or service are even better. Give discounts, coupons, or gift cards for whatever you have to offer. Get people in the habit of frequenting your business, and they’ll be more likely to give you their business on an ongoing basis.
4) Refine Your Campaign Pitch
When creating your GoFundMe campaign page, you’ll want to make it as appealing as possible.
- Post A Fun Campaign Video: Keep it to around two minutes, so you don’t lose viewers’ fickle attention. Don’t be afraid to show a personal touch, as people prefer authenticity and humor to slick sales pitches. You should at least allude to the personal challenges you’ve faced in growing your business. After all, this is GoFundMe; tugs on the ol’ heartstrings are expected.
- Make Your GoFundMe Campaign Page As Attractive As Possible: Use high-resolution images to promote your campaign. Preferably images that feature both you and your place of business. Remember: having a personal touch is key.
- Write A Descriptive Title: Try to summarize what your campaign is all about with one phrase. Don’t just write “Business Needs Help” — that doesn’t tell anyone anything or capture their interest. A good, catchy title can help distinguish your campaign from the thousands of others like it!
5) Seek Support From Friends & Family Before Launch
Not to diminish the importance of marketing your campaign to the public at large, but your most important source of support is likely to be your personal network: friends, family, co-workers, acquaintances, etc. Not only are they likely to contribute a significant proportion of what you raise, but it’s essential to secure their support before your campaign goes public. That way, when you launch your campaign, strangers who come across it won’t see “$0” as the amount raised. Success breeds success, and it’s easier to attract public support when you’ve already secured a decent chunk of funding.
You can have family members donate anonymously if you don’t want people knowing how much of your support comes from relatives!
6) Market Your Campaign Via Social Media & Email
To build buzz around your GoFundMe campaign, you’ll need to market it on your social media channels. Use Facebook, Twitter, Instagram, and the like to spread the word about your story and your campaign. If you can, try to collect the email addresses of those interested in your campaign to build a mailing list. You can use this list to give updates on your business’s progress and whatever other behind-the-scenes material you like. You can use email marketing services to keep your followers updated with attractive template-based emails in which you can detail your progress.
Try to develop some press contacts as well. This way, when you’re ready to launch, you can alert them ahead of time.
7) Keep Everybody Updated After Your Campaign Launches
There’s a reason it’s called a campaign — you have to work hard to keep the contributions flowing! The uncomfortable truth is that most crowdfunding campaigns, whether they be for business or personal causes, don’t reach their funding goals. If you want to beat the odds, a compelling story and a nifty video won’t be enough. You’ll need to work on your campaign continuously as if it were your job.
Once your campaign is in full swing, keep everyone informed with frequent updates. Don’t just post updates to your GoFundMe page — make sure to send out updates through all your social media channels as well. Go ahead and get personal with your updates. Don’t just rattle off a list of statistics. Document your continuing personal involvement in your campaign for business funding. Be sure to respond to anyone with questions about what you’re doing, both on your GoFundMe page and on social media.
8) Stay Engaged With Your Backers Post-Campaign
Let’s say you overcome your challenges and meet your funding goal. Fantastic! Now, what are you going to do with the contacts you’ve made, the followers you’ve attracted, and the mailing list you’ve started? If you want your business to thrive, you won’t just let them drift away.
Consider an email campaign to keep your contacts apprised of your latest doings and to offer special promotions. Stay active on the social media channels you used to such great effect during your campaign. Maintain the relationships you developed with your first customers. These people will be your most important evangelists, spreading the good word about your business and the friendly, personable owner who treated them so nicely.
People long to experience a sense of community in this lonely, atomized world we have unconscionably created. Provide them with one, and they will reward you.
Crowdfunding is hard. As I mentioned at the start of this article, most crowdfunding campaigns fail. There’s a reason why crowdfunding hasn’t solved the problems of startup undercapitalization or bankruptcy-inducing medical expenses. However, if you prepare beforehand, build a community of supporters, and approach the task like a job, you’ll significantly increase your chances of success when using GoFundMe to start a business.