There are inherent challenges to being a small or medium business owner. Navigating those challenges is a daily endeavor but there are tools available to business owners these days that were not previously accessible.
SME (small medium enterprise) crowdfunding is one of those tools. It is opening doors for businesses to acquire necessary funding, move into new projects, and make developments that can grow the business and benefit investors alike. Here are a few of the most important reasons that small and medium businesses should consider SME crowdfunding.
Greater Access to Capital
Crowdfunding and tokenization for SME or startup fundraising are providing greater access to capital for businesses of all backgrounds. Resources can be difficult to come by, especially for small businesses. Crowdfunding allows those entrepreneurs to go around traditional financial institutions and work directly with supporters and potential investors.
Businesses can tap into the power of the internet, reaching a wider audience and increasing their overall chances for success. For businesses that operate in underserved or even marginalized communities, crowdfunding offers a potential source of capital that would not have otherwise been available.
Entrepreneurs, by offering a stake in their business, can offer investors a sense of ownership that may not have been possible for them, either.
Customer Acquisition
Depending on the nature of the business, crowdfunding for SME can be a fantastic way to grow one’s customer base. Not only does this avenue provide potential capital, but it offers direct engagement and access to potential customers. The opportunity to grow and build those relationships, learn more about the target market, and appeal to a wide audience is massive.
Engaging customers early in the business cycle is a fantastic way to build loyalty while also establishing a much stronger foundation for growth. It can also allow businesses to garner invaluable insights and feedback, which can lead to an improvement in business decisions as well.
Increased Exposure
At the end of the day, no matter the business venture, exposure is almost always a good thing. The more people that know about the business, the more that will likely want to get involved. Through SME crowdfunding, businesses gain exposure to a much broader audience than would have been possible through traditional investment means.
Crowdfunding campaigns, whether they feature tokenization or other means, are often marketed on social media, digital channels, and other online platforms. The potential for visibility is through the roof.
That increased exposure and potential to reach new audiences can help expand the potential reach and customer base of the business. Moreover, it allows the business to target its core audience more effectively in the long run.
Lower Costs
Near the top of the list of the biggest reasons why SME businesses are going the crowdfunding route is because of the lower fees involved.
One of the largest challenges facing small and medium startup businesses is not only raising capital but also having to deal with the fees that come along with traditional methods like venture capital or bank loans. Those can be tough to secure and very expensive as well.
Crowdfunding services and platforms are generally more cost-effective. Raising money directly from the target audience reduces intermediaries like banks and investment firms, reducing fees and other prohibitive startup costs.
Funding for small and medium businesses is changing and for the better, depending on your point of view. Access to target markets, lower fees, a major boost in exposure, and the potential to acquire customers before launch are all major benefits to any business. Platforms offering tokenization, it is just another means through which crowdfunding is possible.