I Raised Over $1.2 Million : How To Crowdfund Your Business Like a Pro

crowdfunding is the most accessible way to finance your product idea the potential is limitless it's helped countless small business owners raise money and build the following but launching a successful crowdfunding campaign isn't easy you can't simply set up a page on kickstarter and wait for the cache to roll in i'm dan i'm the co-founder of unbound merino an ecommerce apparel brand behind three successful crowdfunding campaigns that generated over a million dollars in revenue i'll show you everything we did to get our business started using crowdfunding which led us to seven figures in sales in our very first year as a shopify store if you watch this entire video you'll have my blueprint for success i'll show you how to plan prep and launch a crowdfunding campaign i'll even give you tips on how to fulfill your orders so you can transition into a self-sustaining business once your campaign is over so grab a notepad and let's dive right into it [Music] i often joke that at their core crowdfunding campaigns are really just millennial infomercials because the successful ones i've seen follow a very similar format they're typically a campaign that pitches a solution to a problem so you'll have a video placed at the top of the campaign catchy campaign slogans one time only pricing and a seemingly endless list of benefits to the customer written as clever sales copy a good crowdfunding campaign it's like an exercise in sales mastery in a way that would make ronpo peel proud but wait there's more a crowdfunding campaign beyond being a really great framework for pitching and selling your product it's kind of like building the business plan in itself in order to create a successful crowdfunding campaign you also need to figure out the whole business beyond just having the idea you need to consider what your value proposition is you need to firm up the manufacturing create a brand with a brand identity have your pricing strategy figured out have great photography and video content and you need to have great sales copy that communicates the benefits of your product very succinctly the process of creating a good and full crowdfunding campaign forces you to figure it all out and that's what's needed to start a business anyway so for example our crowdfunding campaign this took us a year and a half to complete from start to finish and aside from it leading to the successful campaign itself it gave us everything we needed to launch our ecommerce store on shopify let's go through all the steps that my team and i did in order to have that successful launch how we found our manufacturer if you want to sell a product you need to have a product to sell and finding a manufacturer is no easy task for us it was probably the most nerve-wracking part of the whole equation we needed to develop a great product that we were proud of and to do that we needed to find a great supplier who was willing to work with us and to work with a great supplier we needed to prove that we had the potential to be a great buyer even though to be honest we weren't sure if we'd ever put in a single order to find a good manufacturing supplier we turned to alibaba if you have a strong network in the world of manufacturing you may not need alibaba but we needed it we had no connections to any manufacturers who worked with merino wool or who made apparel at all so we began digging our goal was to find a manufacturer who didn't require minimal order quantities that were too unrealistic to us we found that order quantities between one to three thousand units per style was on the low end so that's the ballpark we had to play in we'd click open a new tab for every manufacturer who looked like they might be a fit so browser window after browser windows open until we had way too many tabs in our internet browser to even count we must have opened like a few hundred tabs of potentially good fitting manufacturers and then one by one we looked at their page see if we like their photos like their pricing believe they were established enough and we let our gut guide us a little bit so after closing the tabs of those that clearly weren't a fit we reduced the list to around 80 to 90 manufacturing pages and now it was time to start reaching out we created the following message which we sent out to every single manufacturer that still had an open tab in our browser obviously this questionnaire is unique to our production needs and it would definitely need to be different depending on whatever it is that you're manufacturing but this is the word for word of what we sent to one of our suppliers subject line quantity need three to five thousand pieces now this was an exaggeration but we wanted to look like a worthy buyer my name is dan dempsky i'm an entrepreneur from toronto canada i'm the founder partner in three businesses one which was recently sold hitsu socks biz media dbrand so i was using my entrepreneurial resume as a way to try and build some credibility for myself you should just sell yourself in any way that you can i'm looking to start a new business retailing merino wool t-shirts and i came across your page i have a few questions one do you have different styles fits colors for your shirts that aren't shown on your alibaba page two are they 100 merino wool three do you have any merino wool blends with any other materials four what is the cost per unit at your lowest minimum order quantity five what's the cheapest price you can offer and at what quantity we need to get to to get to that price six how long does it take from the moment an order is placed to fully complete production and to have it on a shipping container on its way to canada seven can i visit your factory if we decide to do business with your company where exactly is it located eight what are the options for branding our shirts heat transfer logo stitched label please provide pictures of all the readily available options nine where is the wool source from can you let me know all the details about your wool supplier and the certifications of wolf quality and 10. can we order samples if so what would be the cost for 10 to 20 sample shirts i believe that's everything for now please provide us with a quotation and let me know if you're available next month for us to visit and inspect the factory should we decide to do business together we're flexible on dates but do require a factory visit if possible i look forward to hearing back from you thank you so almost immediately the responses started to come back some within a couple of hours so we waited a few days and then we started to read through them and we put aside those that responded with the best english since they are overseas and we wanted to make sure that the communication was there those who seem the most honest those who are the most eager and of course those who are welcoming to have us come visit them in their factory to us it's very important to do business face-to-face but more so to see the environments in which our products were made even though we weren't sure if we'd ever meet them we just wanted to be sure that the door was open so out of the 80ish questionnaire sent we felt good with about 10 of the suppliers that responded we got on skype with them we explained what we're looking to make and we started to ask questions about the cost to produce samples a few of them refused to make samples without a deposit for the entire order which left us with five that we continue to be impressed by and they were willing to make samples to our exact specs for a small sample fee once we confirm that they would make our prototypes we asked them to send samples of our clothing but not made to our specs so we could quickly test the exact wool that they'd be able to provide us and we could test the material and see if we could push it to its limits so what we did is we set up this exhaustive testing period where we tried the clothing out and we ended up mixing a couple of manufacturers just because we didn't like the material which left us with just two manufacturers they hit the bullseye on every mark we began to work with both of the manufacturers we love to develop prototypes which included a self-funded trip to visit them in china to go over the design and to meet in person i believe meeting in person it makes the world of difference you probably should know your manufacturers to observe their facility assure they run an ethical operation and to know where to find them if anything goes wrong hey you never know this won't always be possible for everyone but it's worth the effort and consideration now i'm not going to elaborate more on the design and prototyping process because it's only going to be relevant to us and to clothing and that will change drastically if you're making something out of metal plastic or something else prototyping and sending samples overseas back and forth in relationship building this isn't a quick process it takes time patience and commitment and today we're proud to say that we've been back to visit our manufacturers many times and we have a truly great trusting and meaningful relationship with them you can't create a bond this strong in a month we've earned each other's trust and respect and we understand each other's goals put the time in it's important and it's rewarding fast forward past our prototyping stage to having our own product in our possession only a few pieces of each sku we were ready to move ahead and try to bring this product to market we knew we had something amazing on our hands but that's only half the battle we had to convince a bunch of strangers that what we had was something special kickstarter versus indiegogo now this is a question we get asked very often why did we choose the launch on indiegogo over kickstarter if kickstarter are so much bigger and more well-known truth be told a friend of ours he came to us and he was mentoring us early in the campaign and he said go with indiegogo because you can take advantage of really really good account support whereas with kickstarter they don't make it easy to talk with an actual person our decision came down to thinking that having an account rep was a good idea because we needed help as we tried to navigate our way into our first crowdfunding campaign they took my phone calls they provided insights and most importantly what they did is they cut a deal with us that if we got a certain amount of backing they committed to feature us in their marketing emails indiegogo gave us the attention and support we needed and a marketing boost we couldn't have ever known was coming our way i imagine working with kickstarter is also awesome but if you decide to go the indiegogo route make sure to negotiate your email placements early that can make the world of difference for you and also be sure to establish a relationship with your account rep as early as possible maybe you'll want to set up weekly calls with them maybe ask them for whatever resources they have to help you build your campaign this is a serious serious competitive advantage that they have and it's worth taking advantage of how to set your campaign goal in our campaign we said we needed to raise thirty thousand dollars to launch the business and get to manufacturing the reality though is that if we raise less than 75 000 it would be nearly impossible for us to launch and if all we made was 75 000 we would likely just squeeze by and not be set up well to transition into being a real business after the campaign but we made our campaign goal much smaller than what we really needed for a couple of reasons the first was that indiegogo committed to promote us in their newsletter if we hit 30 percent of our campaign goal in the first 48 hours to make that goal more achievable we just lowered the target but the main reason we wanted to have a smaller target was more for the optics of it for potential backers it's always more attractive to buy from a campaign that's doing really really well so if a campaign hit a hundred percent of its funding goal in the first couple hours there's a certain appeal it achieves that it likely wouldn't have if it was only forty percent funded so if you raised thirty thousand dollars of a thirty thousand dollar goal you appear quite different from a campaign that raised thirty thousand dollars of a seventy five thousand dollar goal even though they both raised the exact same amount getting to a hundred percent quickly can generate buzz and excitement around your campaign and it's just a small little tactic you may want to consider this is all about that early momentum we were doing whatever we could to appear like our campaign was killing it right from the get-go and to lock in our newsletter feature with indiegogo we needed to get ten thousand dollars in sales as fast as possible we had no idea if people browsing their site would care enough to back our campaign we had to get our own traffic to the campaign and it had to be people we could count on to support us and who better to lean on than friends and family the answer nobody now getting your mom siblings and best friends to back your campaign is easy but that alone wouldn't get us to ten thousand dollars in sales we needed to be able to get friends and acquaintances to back us if we really wanted to get that momentum but the challenge is that there's so much noise on social media that posting about your campaign or even individually messaging your friends may just get drowned out by everything else that's going on in their news feeds and in their inboxes what we did is we created around two to three hundred videos where we individually asked our friends each friend getting their own video to go check out our campaign and ask them to support us the thing here was that a facebook or twitter post can easily be ignored or missed and that a mass message that is copied and pasted and sent to a bunch of friends can also easily be read and ignored but there's something different about receiving a video that's custom made for you named yourname.mp4 or something and i don't mean like a complicated edited video i mean turn your webcam on hit record one take done upload to youtube as an unlisted video and send to the person you made the video for telling them about your campaign and asking for support my partners and i we ended up staying up all night having a few beers and pumping these videos out until we did one for every single friend and acquaintance that we were comfortable reaching out to now these video messages they're hard to avoid and people enjoyed seeing a video made just for them especially if we included some inside jokes and some silliness and at the end of the day our batting average with this initiative was huge and most of the people who watched them were happy to back our campaign one last detail about the friends of family blitz don't have a thank you perk like many campaigns do for a dollar or five dollars that gives people the opportunity to help support you without actually receiving your product it's a really nice thing for people to do but if you give people the opportunity to kick a few charitable dollars to your campaign many of them may do that instead of buying one of your actual perks and that really won't help you so just don't offer that sell your actual product our cheapest perk was 50 if people didn't want the product or they didn't want to spend 50 or more no problem at all we decided that we'd rather ask and have some people not contribute at all to the campaign that have an easy five dollar thank you option that would potentially take away from lots of the 50 100 or 200 backers the benefit to them is that we had all sorts of super early bird prices in our first few days and most of them they just wanted to help out and we made sure to express gratitude to each and every single one of our friends and family members individually for their generous support like we just wouldn't have gotten off the ground without them now for the record we raised over 20 000 in the first 48 hours of our first campaign this was 95 friends family and acquaintances after the first few days the order started trickling in from all over the world because we were now a fast growing trending campaign on the platform but it all started with our own self-made momentum pre-launch email acquisition it's a crowdfunding best practice to build an email list prior to your launch and to many successful crowdfunders this is the cornerstone of their success now truth be told when we launched our first campaign we didn't do this at all we had zero emails to start but in our later campaigns having emails made the world of difference and jump-started the first few days of our campaign having a large email list prior to your launch is massively beneficial however it comes with a cost the most common way to acquire emails is writing facebook ads to some kind of lead generation landing page again this costs money when we dialed in our marketing efforts we got the cost per email down to roughly a dollar fifty we used a landing page platform called unbounce to direct our email acquisition ad traffic the great thing about running these acquisition campaigns is not only do you get a build or email list which ultimately should lead to future campaign backers but also this is an opportunity for you to test various different brand messaging and ad copy and see what's going to actually work for your campaign go and visit the facebook ads library and you can look at advertising from many different competitors in your space and get a feel for what messaging may be working out there of course there's no way to know for sure if these ads perform for them but it's a good reference point anyway so while email lead generation is incredibly beneficial be mindful of the likely cost per email and conversion rate on those emails do some rough math and assume a dollar fifty to two dollars and fifty cents per email with a two to five percent conversion rate on those emails with that math you could expect to pay fifteen hundred dollars to twenty five hundred dollars to get a thousand email addresses which roughly should convert to about 20 to 50 sales on your campaign depending on your conversion rate what do you expect the average order value price to be if you start to break down the math you may feel comfortable putting a few thousand dollars into your campaign pre-launch maybe even more but regardless of how much money you're comfortable investing pre-campaign it's worth the effort even on a small scale to start testing your advertising and campaign messaging at first we were reluctant to approach a crowdfunding advertising partner but when all was said and done i think it's a really worthwhile investment we initially didn't have any budget for ads but once we got a taste for it saw that it worked pretty well we decided to pump more money into the campaign since we saw such a clear and direct roi now for those of you who don't have ten thousand dollars to put into advertising we didn't really either we ended up putting a few thousand dollars of our own money in at the start and then we later agreed to pay the additional seven thousand dollars to our advertising partner and they were gracious enough to put a bit of trust in us as they saw the campaign was clearly making money from the get-go although we didn't have a budget at the start it was an easy decision to put that extra money into ads mid-campaign because we had a weekly report on the roi the way our advertising partner worked is they took a setup fee then worked entirely on commission they create the ads with our photos and assets and they spend our budget for us to try to get the most return for their spend since they're working entirely on commission they obviously want to see us succeed the best part about working with an ad partner is not just to help on creating and deploying the ads something we had no clue how to do effectively at the time but more importantly it's the access to their lists of people that they target with the ads their lists are ripe with people who truly love to back crowdfunding campaigns here's a look at what a weekly report looked like from our ad company as you can see most of the backers came from their master custom list which is their exclusive list of people they've built over years doing ads in the crowdfunding space another thing you'll notice is the weekly metrics at the bottom of the spreadsheet we specifically asked for these numbers so we could paint a picture of our true roi total revenue for the week total costs this wasn't just the cost of the ads we had to pay the ad company a 10 commission for the sales they directly drove to our campaign so we asked them to give us a true cost of our ad spend including their share margin average customer value average customer value after fees that same average but factoring in the fees that will come from indiegogo as well as bank and paypal fees true take-home value all things considered this is what a transaction would net out to once everyone is paid this is the number i had to really dwell on because the next number that mattered in the equation was the cost of the goods sold something i'd have to consider importing fees on duties shipping insurance etc all things considered the money we were left with on the sales driven by ads they weren't that profitable but week by week we got to decide if it was worth continuing and week after week we decided that it was worth it because we still made a bit of profit at the end of the day but also we acquired a new customer who we thought maybe would be a customer for years which i could tell you now was a great strategy because many of these customers did stay with us for years the other sweet part of the deal was knowing that they were driving much more traffic to our campaign page than we would ever be able to do alone this helped us sustain our campaign in the trending category which resulted in a lot of other backers that they didn't take commission on because we can't know for sure if they directly cause those sales now they're fully aware of this and they're happy either way although impossible to measure if you factor in the trending category and the lifetime value of these backers this kind of is a no-brainer decision i highly recommend saving money to invest in advertising because at the end of the day it really works for us and they can really work for youtube now if you're looking to start a crowdfunding campaign you probably have your site set on creating your own shopify store and as you know this is where we run our store too and there's no better way to try the platform out than to sign up for their 14-day free trial you don't need a credit card to sign up but you'll get to test everything about the platform and see how it can work for you we use shopify use it from the beginning and it's the best way to start grow and scale your business so sign up for the 14 day free trial and see what shopify is all about early bird prices are another good way to keep the momentum going at the early stage in our case we use them to get a little bit closer to our fundraising goal now our super early bird pricing was so cheap that the profit we made on these sales was negligible but the fact of the matter is is we had minimum order quantities to hit to go into production and having a one-time limited deal helped us get those impulse buys that got the money in faster so we can get closer to our manufacturing stage once we were past the minimum order quantity we move the campaign to our regular price use the early bird stage to get the money in but then switch your focus to profit the harsh reality of fulfillment this is meant to be a cautionary tale and i wish someone told us this before we launched the campaign but i'm gonna tell you if you're launching a campaign obviously you're gonna assume or hope it's gonna be a huge success and if it's a huge success you're gonna have a lot of orders to fill in our case we had over 2000 orders to send to over 90 countries we had our sleeves rolled way up and we were ready to burn the midnight oil to make it happen now we knew this was going to be a monstrous workload but really we had no idea have you ever browsed through all the kickstarter in indiegogo campaigns that made many times their funding goal and looked at the comments from backers it's actually pretty amazing how many campaigns were complete home runs but then they have this long stretch of time where they're having to deal with angry backers who've been waiting for their products and whose patience of running thin we strategize on how to fulfill orders and had a bunch of solutions that we ended up having to scrap last minute for various reasons and when our inventory finally came in we had a small storage warehouse full of boxes a packing table two dymo printers connected to a stamps.com account one hired helper and a massive list of orders to start sending out the big mistake we made is we had no idea how long it takes to package and ship a single order and the main reason for that is because we didn't have the ability to practice until we actually had our product to pick pack label and ship now our packaging is pretty nice and meticulous and maybe a bit more elaborate than the average product shipment and it takes a bit of time to put together but nothing could prepare us for the reality of it taking 12 to 15 minutes to fully pack and ship a single order we're faster now but at first we just weren't quick not to mention issues with stamps.com wi-fi issues in the storage locker not having phone numbers for certain international orders which are required and as people were starting to expect their orders we just couldn't get them out fast enough now there is no good way to deal with angry and patient backers they spent good money on your product and they've already waited a long time they have a lot of right to be upset but there comes a point when you have to balance fulfilling orders and responding to backer queries and it could be painful and brutal here's what we vowed to do differently in our next campaign for starters we would set up completely different expectations for delivery we anticipated getting our products in late august and said we'd ship through september in october if we could do it again we'd say we'd be shipping between january and february perhaps we'd lose some christmas orders but we weren't able to ship a lot of them in time anyway our shipping ran well past december and if we said january february would be the shipping time frame and asked for four to six weeks for international orders and if we started shipping in october we'd be surprising people but in the good way under promise and over deliver is not a new concept but it's rarely executed in crowdfunding campaigns also i would practice shipping orders until we were pros way before we even had the product throw a few hundred bucks into a stamps.com account if

that's what you're using and play pretend fulfillment this is what i wish we did i wish we got mock packaging that's similar to what the packaging we would end up ordering actually was like in at least a quantity of 20 and put it on the shelves the same shelves that we'd be using to store the real packaging i wish we got mock products in our case a pile of t-shirts socks and underwear from our dresser got our packing table set up got the stickers got the labels the printers all the software set up poly mailers anything that would be exactly like a real shipping process i would then set a timer and package 20 orders fully wrapped boxed labeled and ready to send out to the post office i would then take all the packaging drive it to the post office when i got there turn around and drive back or do whatever we needed to do to exactly replicate the real shipping process once it's all done you can cancel and refund all the stamps.com labels and get your money back but you really need to get a handle on what's actually involved you'll also learn the actual cost of shipping of your product both domestically and internationally fulfillment is hard and it was a rude awakening for us and apparently most other campaigns too understand this and get ahead to the best of your ability what if your manufacturer doesn't deliver i live in fear of this and it happens i've heard many horror stories of people getting screwed over in the manufacturing process and it happens all the time so you probably should live in fear of this too but we found a few manufacturers we really liked and we did our initial order with one of them no we knew the prototypes we made were incredibly high quality and we saved unworn samples for comparison purposes but we left nothing to chance when the production started we boarded a plane to shanghai got a hotel room for two weeks and moved our lives there to oversee production this cost us quite a bit of money obviously but we had to in the budget from our campaign earnings we told our manufacturer that we'd be coming to inspect production well in advance and our thinking here was that they wouldn't screw up our order if they knew we were going to be there to watch it being made in real time i can't know for sure if this made a big difference but maybe it did and i suspect it might have all i know is that the quality of our mass production was on par if not better than our prototypes and this insurance to us was priceless not to mention going to shanghai is a great time the life experience of traveling to be with and eat with locals it's one of the greatest bonuses we could have ever imagined so consider budgeting a trip to visit your manufacturers right into your campaign make a budget for the entire business for six months after the campaign ends bucket money for marketing like seo and ads hiring help taxes duties legal fees influencers contingency just start listing what six months of costs are for the business and allocate the money as it comes in we did six months that's just our approach but it's a meaningful exercise that opens your eyes to how fast you can spend a large sum of money by doing it in advance you give yourself a really nice runway to focus on after your campaign ends we waited to be funded before dishing out money and energy into this stuff but i've been burned before and it's not worth messing around with if your side project turns into a business because of crowdfunding get all this boring stuff out of the way in my previous saw company hitsu we got a cease and desist after our first brand name one year into running the company after spending ten thousand dollars on packaging too it was awful and it nearly sunk the business the company that sent us a cease and desist is a multi-billion dollar company and this was a fight we couldn't afford to pursue take care of the legal stuff as early as possible crowdfunding is a journey but it's a great and worthy one if you want to take the leap and start your own business i hope this was helpful as you start your journey into entrepreneurship work your hardest put your all into it and give it a go the best part about crowdfunding is that the worst possible outcome is people don't back your campaign in previous eras people would lose their homes trying to dive into a business like this for us indiegogo proved product market fit without us having to dish out large sums of money our ideas and our hard work were enough to give us our start and if this helps you on your journey i'd be thrilled if you found this video to be helpful make sure that you give it a thumbs up that actually helps the channel and community grow and for more simple actionable tips on how to grow your online business make sure you're subscribed to learn with shopify so you don't miss out on future releases i'm dan dempsky and thanks so much for watching [Music] you

2022-08-19 17:05

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