For fans of Anger Management, one of the running jokes on the show is Jen coming up with a harebrained scheme she thinks is brilliant. Her poor ex-husband Charlie is always hit-up for cash to back her next “brilliant” idea putting aside his own impressions of how absurd any and all of her business ideas are.
Here’s a partial list of Jen’s business brilliance:
* Edible underwear for plus-sized women. Her thinking? “Heavy women like sex too and they LOVE candy.” (Her words, not mine.)
* Vanicure: A mobile nail salon providing a rapid response to women with nail emergencies.
* The turkey food truck serving nothing but turkey, cranberry sauce, mashed potatoes and stuffing every day delivering Thanksgiving all year long.
* Cofftea: For those who can’t decide whether to have a cup of tea or a cup of coffee now they can have both in the same cup.
Putting aside the utter fantasy of hitting up an ex-husband for cash over and over again for crazy business ideas is the very real idea of doing your market research before you launch your business.
Maybe edible underwear for plus-sized women WOULD work. According to the Anger Management episode it didn’t. Boxes and boxes of plus-sized panties attracted ants to the garage where the unsold undergarments were being stored. BUT…
… what if Jen launched a crowdfunding campaign for edible underwear for plus-sized women and it took off?
She would’ve had virtually no risk in using a crowdfunding project as a market research method. Depending on how many backers she got and how much money she raised she’d be on her way to making sales and building her company secure in the knowledge that crowdfunding gave her the proof of concept she needed to roll out mass-production of her new plus-sized panties.
She WOULDN’T have wasted any of her own money designing, manufacturing and marketing a product nobody wanted.
If you’re planning on providing a service or producing a product don’t spend any serious amount of money unless you’ve run a crowdfunding campaign that reached or exceeded its goal.
A successful crowdfunding project has accomplished several things all at once:
You have enough market research through the best kind of customer focus group possible; People that have paid you for what you’re offering them.
You have the money in your bank account to ramp up production or roll out the service without risking a dime of your own money.
You have all those perks to deliver to all of the new customers you acquired. Those perks are called sales. A paid-for crowdfunding perk is a customer order. You acquired all of these customers and made all of these sales using crowdfunding as your advertising vehicle instead of more conventional methods of advertising.
You’ll have completed your first successful marketing campaign promoting awareness of your product or service to a global audience. More about using crowdfunding as a marketing tool in a future article.
If your crowdfunding project didn’t work don’t beat yourself up. Depending on which statistics you look at anywhere between 60-75% of all crowdfunding campaigns fail. It’s not a matter of misery loves company it’s just the facts of crowdfunding life by the numbers.
Don’t overlook the value gained from a failed crowdfunding campaign. Autopsy results from a dead project can be very educational. To run with just one more metaphor, after every plane crash a team of people study the crash site, the wreckage, review the flight recorder and do everything they can to determine how and why the plane crashed.
Why? So all of the factors that led to the tragic crash can be prevented on future flights. In the same vein, studying every aspect of a crowdfunding project that crashed and burned can tell you a lot you might not have learned otherwise making the success of your next crowdfunding project much more likely.
If you weren’t even close to reaching your funding goal, it’s nearly certain your product or service is not what the market wants. Take the hint and move on to another idea. Serial entrepreneurs do this all the time. They might come up with ten different ideas for what they think is a new whiz-bang business only to see six or even eight of those ideas fail miserably. One out of those ten could be worth solid gold and they only get to that pot of gold at the end of the crowdfunding rainbow by continually testing new products and services to see what works with the market.
If you had some action and a respectable amount of backers (let’s say somewhere past the 50% point in terms of reaching a crowdfunding goal) you’re probably on to something. Run a second campaign and make some changes. Tweak the price, change the color/size/functionality of the product. Can it run longer a single charge? Can it run silently? Can it work faster? Can you lower the price? It might make sense to contact all of your backers and thank them for backing you then ask them why they backed your project and what they found the most appealing. Their feedback will give you all of the insights you need with regard to what changes you need to make to boost the chances of success on your next project.