Crowdfunding Your Coffee Shop Can Add Additional Support To Your Coffee Shop Budget
Should you join the thousands of would-be coffee entrepreneurs who are exploring crowd funding part of their startup costs? Today many coffee shop owners are taking advantage of new laws and robust crowdfunding platforms to realize their coffee shop businesses.
If you haven’t supported a crowdfunding effort online, you most likely have heard of one. On any one of the given crowdfunding platforms like Kickstarter or IndieGoGo, you will find thousands of entrepreneurs working hard to convince would-be investors to support their effort, cause, or project. Many are successful and many fail.
Nevertheless, this is certainly a growing online method of raising significant capital – ant it’s only is only a few years old! No doubt, it will only grow bigger in the coming months and years.
While many people use crowdfunding to complete (and bring to market) their invention, projects, and music cds – coffee business (restaurant) entreprenuers are slowly starting to discover the powerful impact of crowdfunding.
Crowdfunding, when done right, can be a great tool at your disposal to raise the funds necessary to either complete or expand your coffee business. While you might hear of the great success stories when it comes to crowd funding, the truth, like we mentioned earlier, is that many do crowdfunding efforts fail.
When “banking” on the success of your crowdfunding efforts, you can introduce yourself (and your business) to a new layer of risk. Managing that risk, minimizing the negative effects of not reaching your goal, and doing everything you can to prepare for either the success or failure of crowdfunding your coffee shop business is essential.
Understanding What Crowdfunding Is…
Crowdfunding can be viewed as an alternative to traditional sources of capital – which traditionally done through banks, investors, or even using credit cards to start your business.
Usually, a crowd funding campaign is done by utilizing one of the many hosting platforms out there (Such as KickStarter or IndieGogo). While these platforms can “host” your campaign, it’s really up to your to promote your campaign through a variety of methods. For example, providing a video, information, and supplemental links to your work – perhaps detailed on your website – are all in an effort to pique the passion and action of your readers is absolutely necessary.
In an effort to entice supporters, typically you are encouraged to create a reward system for a particular amount of support. When the campaign is over, and if it’s successful, you will need to hold up your end of the deal – and deliver your rewards.
What are typical rewards for a coffee shop crowdfunding campaign?
- Coffee or Espresso drinks
- Baked items or snacks (donut, bagel, etc.)
- Free Coffee Beans (whole or ground)
- Baseball Cap
- Rental of Space (To host a party, event)
Mistakes Made When Crowdfunding for a Coffee Business
- Not having a good idea: Yes, there are even bad ideas of coffee shops. Make sure that your concept cuts through a certain level of scrutiny before posting your campaign. Consider bouncing the idea off some of your friends or family. Having a detailed coffee shop business plan can help flesh out your concept. Often times, these alone will help you realize that you’ve reached a minimum bar.
- Not having a good plan: Not having a good plan – or even any plan – before launching your crowdfunding campaign can be a real disaster. Not having a coffee shop business plan (or an espresso stand business plan) is one way to display that you are an amateur. Put yourself in the shoes of your audience: Why would you give money to someone who doesn’t have a plan to use it appropriately?
- Not having a good reward system: Having at least three or four tiers of rewards should be well thought out. You want to balance out the ability to entice supporters with the necessary costs of fulfilling those rewards. As a coffee shop, you have the option of providing a variety of small but meaningful rewards such as a free espresso drink, t-shirt, etc. can be enough to draw small to medium levels of support. Make sure you do the math. For example, if you offer a $25 tier of support and offer a $13 t-shirt – how much money will it cost you? How many supporters at this level will you need to reach your fundraising goals?
- Not identifying who your target market it: It seems pretty obvious right, you are targeting people who like coffee. But can you further discriminate your target market? For example, since you are a coffee shop, your market will be geared towards a specific area. Can you go further? If you are a coffee shop near a university, would students be your target market? If you are a café that wants to offer live music, would your target be musicians and music lovers alike? Make a list of the top three would-be supporters of your campaign. Look at your list. Is the small percentage of this list who will actually support your campaign, going to be deep enough to reach your financial goals?
- Not having a promotional plan ready: If you build it they wont come – unless you promote your campaign. Time and time again, people – really smart people – try to rely on the crowdfunding community to simply find them, get excited, and pull out their credit cards. There is no way around it, you have to have a promotional plan ready to go – complete with a promotional budget – including a schedule of action before you click the release button.
- Not having a video: While not all successful campaigns have videos, many of them do. Improve your changes by creating a 2-3 minute video explaining your campaign, detailing why supporters should buy into it, and why you are passionate about your project. Do you need a video? When in Rome…do as the Romans do. So, the answer is YES! People in the crowdfunding community expect it. Meet their baseline expectations with a creative video. Now remember, some video creation will cost money. Your video budget should be determined before you begin your project.
- Not having your self-hosted website: Having a website for your coffee shop business is essential to presenting yourself as a professional business entity. Get your domain and hosting and establish your website. It needs to be a professional. It’s also a great platform to share your extra-detailed updates, your various social networks, and even further videos.
- Not accurately determining your budget: Budgeting for your entire coffee business is one thing. But accurately budgeting for your campaign is another. After all, how much money will you ask for? How will you know what’s the right budget for your campaign? Working out your budget before hand in a business for your overall expenditures is essential. Then taking that information, determining your source of funding streams, and then specifically figuring out where your crowdfunding campaign comes in will be next. Remember that your crowdfunding platform will charge a certain percentage (about 5%) of your money raised. Additionally, your promotional efforts may add costs (video, website hosting, etc.). Finally, the costs of fulfilling your rewards are real and should be figured in a pro-forma manner.
- Not developing your support prior to your launch: Your friends, family, and early supporters should be notified before you actually launch your campaign. I recommend hitting the ground running by getting your friends, family, and close circle of supports to jump in on the very first day – by snagging up one of the tiers or at lease sharing your story. It’s easier for strangers to jump on the bandwagon when they see you are close to reaching your goal. As it many other things in life, your success breeds success.
- Not providing updates to your supporters: Many campaigns launch and then remain silent. Provide updates will continue to draw interest in your supporters but also entice new visitors to your campaign with action. How many updates are necessary? It depends. You don’t want to inundate your supports with spam, but you want to keep them posted on relevant news.
Crowdfunding Your Money For Your Coffee Shop Business
If you have a dream and plan, anything is possible. But certainly, you will need both. Consider arming yourself with the expertise, knowledge, and wisdom of experience coffee shop business owners who have started their own coffee shop and have learned a thing or two. In our affordable Coffee Shop Business Startup Kit, we provide you with the advice from seasoned veterans.