These are perilous times for small businesses, their owners, and employees. In recent weeks, nearly all of the 30 million small businesses across the United States (and many more worldwide) have been impacted. Of the two million brick-and-mortar storefronts, many have been forced to close their doors – with only some food establishments remaining open, surviving on takeout and delivery orders for their customers. In short, the local business community has been rocked to its core.
One analyst predicted that the coronavirus outbreak could alone lead to over 15,000 permanent closures in 2020. Another Goldman Sachs survey revealed that over 50% of small business owners believed they would only be able to operate for 3 months or less in the current state. What’s more, nearly 70% of owners felt uncomfortable applying for emergency funding or raising funds via donations.
Many business owners are turning to their community to help keep their business afloat during these challenging times. In particular, thousands of businesses have started some variation of a donation drive, pooling together funds donated from the millions of consumers who patronize these very businesses.
But how does a small business owner go about setting up a donation drive? What are the options available to local businesses and what are the suggested best practices in raising money? We’ve got some tips and tricks below if you’re seeking to launch a crowdfunding donation campaign.
Why start a crowdfunding and donation-based campaign to help your small business?
Crowdfunding is when a large number of people (your customers and fans) give small amounts of money (in the form of donations or investment for something in return) to fund your business. Although small business grants and loans, in addition to stimulus aid, are certainly worth seeking out, the advantage of crowdfunding is the immediacy in which funds can be accessed by your business. Grants, loans, and stimulus packages can take weeks if not months to take effect. Compare that to the various crowdfunding platforms, where the standard time to withdraw and deposit funds is a matter of days, if not hours.
Another intangible benefit of crowdfunding is that you get to engage your community and the customers that have supported you for years. Your shoppers want to help, but often don’t know how – particularly if a business’ doors are completely closed. By enabling the community as a whole to support the businesses that are the underlying fabric of their community, business owners can continue to strengthen the relationships they have with their customers even during these turbulent times.
Lastly, there are no restrictions or limitations as to how you can use these funds. Here’s a list of some of the ways we’ve seen local businesses put their crowdfunding to use:
- Monthly rent or mortgage
- Meet payroll for employees in crisis
- Offset the cost of goods gone unsold
- Cover the cost of offers and promotions to keep customers shopping
- Pay it forward! Help another business in need
How to choose the right crowdfunding platform
There is no shortage of options when it comes to crowdfunding platforms for personal fundraising efforts. We took a look at some of the different options available and the strengths of each.
Pricing: Fundly charges a 4.9% platform fee and credit card processing fee of 2.9% + $0.30.
With Fundly, the mainstay of their platform is that there’s no minimum amount you have to raise to keep your funds. Also, a huge plus is that your funds can be withdrawn in a quick 24-hour turnaround and you can also set up automatic transfers to get your money even faster.
As an added benefit, once your campaign begins, you’ll have the option to receive email updates and alerts that will help direct you through the starting stages. These updates are an easy way to keep track of your progress and keep supporters in the know.
Pricing: GoFundMe takes 2.9% transaction fee, plus a $0.30 fee per donation
As with most crowdfunding platforms, GoFundMe enables you to tell your compelling story to the masses while adding any photos, videos, or content that you deem valuable in your fundraising efforts. GoFundMe’s main advantage, however, is that it is also a recognizable brand name in the crowdfunding donation space, similar to Kickstarter and Indiegogo in the new ventures and products space.
Similar to Fundly, GoFundMe allows you to keep all donations made to your cause, regardless of the amount raised. Among the suite of tools that GoFundMe provides in your fundraising efforts, a personalized perk is their heavy lifting feature that allows you to send automated thank you’s to all donors.
On March 24, GoFundMe announced a Small Business Relief Initiative and Fund in partnership with Yelp and Intuit Quickbooks. If your business is listed and claimed by you on Yelp, a GoFundMe campaign will automatically be started on your behalf. Local community members will be able to search for your businesses on Yelp and click on a “donate” button on your business profile to provide their support. Separately, Intuit QuickBooks has built a help site to provide small business owners with helpful financial tools and resources in this time of need. Check out their FAQ page to get all the details!
Pricing: 2.9% + $0.30 per payment
While FundRazr hosts plenty of charitable and personal crowdfunding campaigns, it also hosts business-related crowdfunding campaigns. Furthermore, in addition to their standard crowdfunding campaigns, the company offers a unique white-label crowdfunding package to business/corporate clients. White-labeling means that FundRazr will remove their own logo and branding from your crowdfunding website completely and customize the page with only your business’ logo and branding elements.
Similar to Fundly and GoFundMe, Fundrazr has no limitations on the fundraising timeline, nor on the minimum amount raised to withdraw your funds.
What are some best practices and advice when setting up a campaign?
Great – so you’ve chosen which fundraising website platform is right for you. Now what? Here are some best practices to help you create and launch a successful crowdfunding campaign to keep your business afloat until the coronavirus crisis subsides.
1. Check out other inspiring campaigns.
Thousands of small businesses have launched donation drives to battle these unprecedented times. Take some time to investigate how businesses like yours have structured their fundraising campaigns (funding goal amounts, donor perks, etc), what photos and descriptions they use, how they post it on their social media, and so forth. There’s no need to ‘reinvent the wheel’ if you find a successful campaign template that you would like to model after.
2. Come up with a realistic goal and be transparent with how the funds will be used.
Most platforms will allow you to adjust your goal as time goes on. Be sure to get off to a fast start, and give donors the feeling that they are helping close an attainable gap. Lastly, donors are more likely to give when they know exactly how their money is going to be used.
3. Tell your story. It’s unique and compelling.
Your business is your baby. It may be the reason why you wake up each day or it’s an inspiration you’ve carried with you since childhood. Whatever might be the case, the story and background of your business is the way to get the attention of your customers and potential donors. At the end of the day, we are all human, and we all have a story to tell. Give donors a reason to become a part of your journey.
4. Leverage your community and self promote.
Your campaign is launched – congrats! Now it’s time to grab your megaphone and shout from the mountain tops. Remember, your consumers want to help out, they just need to hear about your donation drive. Leverage every channel that you have accessible to you, including Facebook, Instagram, and Twitter. Even more importantly, now is the time to leverage that awesome database of customer phone numbers and emails that you’ve built using your Fivestars programs and tools! (Don’t have Fivestars? Learn more here.) Through email, SMS text messages, and mobile app notifications, you can drive an amazing volume of your loyal customers to your campaign – and accelerate you hitting your funding goal!
5. Update your crowdfunding campaign and keep donors up to date on the results!
Unlike traditional fundraisers, crowdfunding campaigns can last weeks, if not months. So it may not come as a surprise that your donors and potential donors want to keep tabs on the progress of your efforts. Keep your campaign page up to date with recent photos and written updates. Once you hit your goal, be sure to reach back out to all of your donors to celebrate and send thanks! Remember, your relationship with your customers doesn’t end here – they are the lifeblood of your business during more normal seasons.
These are certainly unprecedented times for the US economy and community, much less the small businesses that act as the heartbeat of our cities. By engaging your community of shoppers, you can better weather this financial storm all while strengthening the relationships you have with your customers.