How to Start a Crowdfunding Consulting Business

Part 1 - How to start a Crowdfunding Consulting business - Background

Crowdfunding is the practice of raising money to fund a project or business venture by raising small increments of money from a large pool of people. While this approach has funneled over $65 billion into the economy, research indicates less than a quarter of all crowdfunding projects are successful. As a result, many entrepreneurs seeking funding are now turning to experts for help. A crowdfunding consulting agency offers their expertise, assisting businesses as they launch, manage, and promote their crowdfunding campaign.

Our guide is in 3 parts:

• Part 1 - How to start a Crowd Funding Consulting business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a crowdfunding consulting business?

Startup costs for this type of business venture are minimal. Your clients will be spread out across the globe with most meetings conducted online. Therefore, those looking to minimize costs may choose to operate out of a home office. You will need a computer, high-speed internet, a telephone, and marketing materials. While startup costs may not exceed $10,000, what you bring to the table is invaluable – a proven track record and real-world experience.

What are the ongoing expenses for a crowdfunding consulting business?

Much like your startup expenses, overhead costs to run a crowdfunding agency can be kept at a minimum by managing your business out of a home office. Once the business experiences significant growth, however, it may be necessary to lease an office space and hire additional staff. At that point, ongoing expenses will expand to include payroll, increased insurance, an increased marketing budget, and overhead expenses.

Who is the target market?

A crowdfunding consulting business’s target market is any new project or business venture that is seeking funding to help launch their product/service and gain exposure. Some consultants decide to limit their services to certain industries while others prefer to consult wherever their expertise is needed.

How does a crowdfunding consulting business make money?

Some crowdfunding consulting agencies receive commission-based compensation while others are paid a flat or hourly rate. Once a contract is signed, your customer should pay a deposit, with the balance paid when the contract ends.

How much can you charge customers?

Since each crowdfunding campaign is different, there is no one-size-fits-all approach to setting your pricing. Many agencies require a due diligence fee of $1,000, an upfront payment of $3,500, and 20% to 35% commission on monies raised.

How much profit can a crowdfunding consulting business make?

If you lead a successful crowdfunding campaign towards their goal of $1 million dollars, with a commission fee of 20%, net profit for that campaign equals $200,000.

How can you make your business more profitable?

Due to the nature of this business, it’s important to not overextend yourself or commit to too many projects at once. However, many crowdfunding consulting businesses offer additional services, such as public relations, advertising, and marketing.

Day-to-Day and Growth

What happens during a typical day at a crowdfunding consulting business?

Your workday as a crowdfunding consultant will entail the research and implementation of crowdfunding strategies based on the unique needs of your clients. You will monitor the progress of each campaign, adjusting your strategy based on which methods are reaching your target audience and which methods are failing. Clients will expect to be regularly updated on your progress with clear data outlined in your reports.

When not working on client accounts, you and your team will need to utilize your knowledge and skills to identify potential new clients. Extensive research should be a part of your daily tasks, ensuring you are prepared for prospective new client meetings. Your organization’s successes should be outlined in a business portfolio that demonstrates your ability to crowdfund across a myriad of industries.

What are some skills and experiences that will help you build a successful crowdfunding consulting business?

While crowdfunding is a proven method of raising money for a new business venture, only a quarter of all efforts result in success. Therefore, those entering this field should have a proven track record, with numerical data, to back up their successes. This experience comes with a large network of influencers and correspondents who can assist in gaining exposure, leading you to a larger clientele.

At the conclusion of a successful crowdfunding campaign, your clients should have a clearly defined brand with the materials needed to realize continued growth. Therefore, it is important that you are able to listen to each client, understand their branding needs, and develop a strong, memorable brand for your clients.

What is the growth potential for a crowdfunding consulting business?

While still in its infancy, the global crowdfunding market is expected to experience 16% growth between 2020 and 2025. Experienced entrepreneurs getting in on the ground floor have the potential to achieve significant growth, even in their first year.

What are some insider tips for jump starting a crowdfunding consulting business?

It’s important to remember that potential clients have likely read the same reports you have read regarding crowdfunding. While they recognize the potential to reach their financial goals, success relies on the knowledge and experience of the individual or agency managing their efforts. A portfolio of your successes and a list of references will go a long way towards putting their minds at ease.

Consultants are encouraged to become a member of the CfPA which offers its members a platform to stay connected and network with others in the community.

How and when to build a team

The most successful crowdfunding consultants are PR experts, and they have the ability to write compelling content and understand the various social media platforms along with their advertising tools. Know your strengths and weaknesses and build your team around those qualities.

Part 2 - Is a Crowdfunding Consulting business the right fit for you?

Part 3 - Action plan to launch your Crowdfunding Consulting business in 90 days