Funds Usage

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How to Do a Great Job of Explaining How the Crowdfunding Money Raised Will Be Spent

By Robert Hoskins

How to Do a Great Job of Explaining How Crowdfunding Money Raised Will Be Spent by Robert Hoskins Front Page PR

How to Do a Great Job of Explaining How Crowdfunding Money Raised Will Be Spent by Robert Hoskins Front Page PR

How will Your Crowdfunding Proceeds Be Used?

Every crowdfunding campaign should really start with a business plan. It doesn’t have to be complex 50-page document that you would take to a bank to get a loan, but it certainly helps entrepreneurs think about what their real long-term goals will be.  Many people think of a crowdfunding as a short-term way to raise money to start a business, but most do not think or plan past the end of their campaign.

Instead, inventors, entrepreneurs and startups should think of a crowdfunding campaign as the formal launch of their business. This includes spending a fair amount of money on marketing to determine the best target audience to sell their products to; where those customers live, eat, and play, and then plan an integrated marketing campaign that uses a combination of advertising, email marketing, PR, media relations and social media strategies to raise awareness for their campaign and drive potential donors/investors to their crowdfunding profiles.

Another thing a business plan helps a company develop is a channel marketing strategy. How and where will this product be sold?  E-commerce centers, retail outlets, franchises, resellers, VARs, distributors or direct from the manufacturer?  Should the company employ a “Push” strategy where the company pushed the product through the channel using “Spiff” programs to provide an incentive to push the product to their customers.

For example,  Duke Venom, a sunglasses manufacturer we worked with, offered a $1,999 retail outlet perk that included a fancy, end-cap display packaged with a large order of sunglasses. We then created “Pull” marketing campaign design to drive customer to the retail outlets by reaching new customers and telling them where they could find an authorized resellers, most of which were online.

They exceeded their crowdfunding goal by 50%. Knowing your marketing costs, such as how much an end cap will cost to build is very important. Same thing is true of hiring manufacturers reps to sell products into large retail chains and how much a shelve slot will cost as well as the minimum first time order they will need to stock their shelves.

How much will it cost to manufacture enough product to fill an order from Wal-mart, Costco or Home Depot? Knowing these costs and outlining them in your funds usage plan will give your campaign a lot more credibility. In addition, a production timeline and a detailed channel distribution give donors/investors more confidence that their orders will be fulfilled in a timely and efficient manner once the campaign ends.

It also shows that you plan on being successful whether you hit 100% of your funding goal or not. And designing your crowdfunding campaign marketing programs should be designed to not only drive traffic to your fundraising campaign, but also designed to keep generating traffic way beyond the campaign’s completion date. Before launching a crowdfunding campaign, its important to know:

  • How much does your gadget cost to make?
  • What will be required to produce, package and ship mass quantities?
  • What target audience do you plan to sell it to?
  • What type of marketing campaigns will you use to let your target audience know you have something for sale?
  • How much will it cost to run these marketing campaigns?
  • Are there any competitors in the marketplace?
  • Has someone already filed a patent on your idea, trademarked your name or copyrighted your slogan?
  • How much will it cost to buy a retail shelf slot?
  • Will the product save time, increase productivity, save money or produce a good ROI?
  • Will the service benefit the local community, help the homeless, feed the poor, etc.?

Knowing the costs associated with bringing your product or service to market is the best way to back up your need to raise money and detail exactly how you plan to spend the proceeds from your crowdfunding campaign.  A wise and prudent budget helps always helps people understand how you plan to spend their hard earned dollars. It is also wise to mention what you will do if you only raise half the money, or what you will do if you go way over your goal? Some campaigns like to add stretch goals toward the end of a campaign to add a couple of extra perks when certain fundraising goals are reached to sweeten the pot.


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Robert Hoskins, a seasoned Front Page PR veteran provides more than twenty-five years of external communications, media relations, digital social media and SEO skills to Front Page PR’s crowdfunding PR and media relations service portfolio.
Robert Hoskins
(512) 627-6622

Mr. Hoskins is a serial entrepreneur and has been helping entrepreneurs, startups, small businesses and Fortune 500 corporations  launch successful marketing communications campaigns for 25-years. He is positive that Crowdfunding will empower all Americans to rediscover the possibility of living the American dream with a little hard work, a great business idea and dedication to planning a well-thought-out crowdfunding campaign.

Tags: Business PlanChannel Distribution PlanBudgetsFunds UsageProduction timeline

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