Starting a business requires a lot of capital, which might turn people away from taking the leap. You might be thinking of crowd-funding your venture. Doing so comes with many benefits, but there are a few cons you should know about too. We’ve discussed them in-depth.
Raising Money is Slow
Even if your business is popular, you won’t be able to raise the cash you’d need in a day. It probably can’t be done in a week either – think months. This is especially true if you need an extra-large sum.
Crowd-Funding Requires No Effort
When it comes to the other ways of acquiring the cash, they would require a lot of work. A common route would be working with venture capitalists. But this requires a detailed business plan, and you need to use the right words to impress them.
Crowd funding does not require anything but access to the internet. All you need to do is set-up an account on the donating platform, type in your goal, and a description of why you need the money. Of course, the better the description, the more chances of people donating. You could hire a professional to write it for you.
It Is Low Risk
Speaking of working with a venture capitalist, it might be a back-up plan for you. You’d be able to get a lot of cash to start your business. However, the money would come at a huge cost – you’d have to give the investors stake. A lot of the time, they’d want a position as a director. You don’t have to do this when crowd-funding. You can just give the donators tokens/gifts.
Don’t forget that wooing investors requires a lot of work too.
You Might Leave with Nothing
Once you’ve set your crowd-funding goal, you might not be able to withdraw any of the cash you’ve raised until you’ve reached a set amount.
That’s why getting a loan might be better. As mentioned, you wouldn’t be able to crowd fund the sum in a short period of time. But a loan would take a max of 3 days.
If you’re a parent in Canada, you’d love to know that there are perks that let you apply for loans, and not pay as much. You can get a baby bonus loan – it takes into account the bonus the government gives new parents. It lets you borrow for more than you normally would. You can rely on a trusted bad credit loan provider to provide the service as well.
Test What the Public Thinks
When you ask the public for donations, you indirectly get to see they would think of your company. If there are not many people interested in funding you, you might have to change what you’re planning on doing.
In turn, you might go viral. You’d have a loyal base before even starting.
There are many pros to crowd-funding, but borrowing from a lender might be the better move. You’d get the cash faster and more easily.
