For years, companies weren't allowed to launch traditional fundraising campaigns like nonprofits or foundations. The Securities and Exchange Commission (SEC) outlawed this for all businesses that had not gone public, thereby severely limiting the financing options of smaller firms. Instead, they had to approach traditional investors or banks for monetary help.
However, this is no longer the case, as the SEC recently decided to abolish this law. Now, company leaders have to figure out how to not only market their wares as they've always done, but advertise their business plan to potential donors. Many of these administrators have taken to the Internet, with the thought that fundraising online already works for countless charities, politicians and other entities that are very successful at garnering money.
Social media comes in handy
As Rick Field, owner of pickle company Rock's Picks, discovered, the power of social media is something that small business owners - as well as charity and foundation leaders - cannot afford to miss out on. He told The Wall Street Journal that he chose Twitter and Facebook as his platforms of choice in order to reach the most potential investors possible.
The key is to remain vigilant and also reach out to investors in other ways, as Field explained to the news source that some have warned him that going online opens his enterprise up to fraud. Having security protections in place, however, can ameliorate those fears.
Crowdsourcing is always a valid option
Taking to crowdsourcing websites like Kickstarter is something that small business leaders might want to consider. After all, there have been numerous reports in the media claiming that this has worked for individuals and charities all over the world.
Dowser explained that while many nonprofit leaders have their favorite platform - typically Indiegogo or Kickstarter - there are a number of websites that cater to small business owners.
For instance, the source highlighted Profounder, which can help leaders drum up support within their local communities, while also providing administrators with legal and investment help. The news provider pointed out that many company owners have found this medium very lucrative, taking to the Profounder blog with their success stories.
33needs might also be worth checking out, Dowser reported. This website gives incentives to potential investors while still providing the entrepreneur with enough money to kick off a project. The news source explained that investors receive 3 percent of the money donated, while 33needs takes in 5 percent, and the small business owner gets the rest.
Organizations that are looking to raise funds through grant opportunities or local campaigns can use nonprofit financial management solutions to improve their chances of success. The software can help program leaders identify potential donors and send out applications with accurate accounting information.