The boom in crowdfunding has produced an army of crowdfunding consultants, but are they really worth your time?
Crowdfunding campaigns reach out to me on a regular basis about posting a review of their campaign on the blog. I’m almost always happy to accept some kind of guest post and offer my own thoughts on their campaign. It’s just what I do.
But not everyone will be so quick to offer advice on your crowdfunding campaign, not for free anyway.
Talking to a campaign owner the other day, he said they had been emailed by more than 20 different crowdfunding consultants and was having a hard time deciding if it would be worth the consulting fees.
Searching for “crowdfunding consultant” on Google brings up nearly 800,000 results and if you’ve ever launched a campaign, you probably feel like you’ve been solicited by each one of them.
Some of the offers bare a strong resemblance to crowdfunding promotion scams I talked about last week. Others are legitimate consultants that can help you put together and manage a successful crowdfunding campaign.
But how to tell real crowdfunding consultants from the scams?
Ask these three questions before hiring a crowdfunding consultant or anyone that offers help on your campaign.
Crowdfunding Consultant Question #1: Do I really need a crowdfunding consultant?
First off, you may not even need a crowdfunding consultant. Nearly every crowdfunding platform has its own blog and there are plenty of third-party blogs that provide a ton of great information.
Against crowdfunding fees into the hundreds of dollars, there’s a library of information available on Amazon. Sure it’s always easier to have someone else do it for you but there is only one person that is truly going to give your campaign the time it deserves…you!
Ranked #1 on Amazon in both the Crowdfunding and the Non-profits & Charities category is Step-by-Step Crowdfunding. I put years of crowdfunding consulting into this book to give you the 17 steps to a successful campaign. Through the book, I’ve helped over 1,200 campaigns build the community they need to raise money in the crowd.
There are times, especially for campaigns trying to raise $100,000 or more, when it pays to seek the advice of a crowdfunding consultant. When launching a business, most people wouldn’t think about doing everything by themselves. You may know about marketing and logistics but do you really know enough about technology to do all the programming and IT tasks?
The time it would take to learn how to do every task is better spent in areas of expertise while outsourcing the rest.
The best crowdfunding consultants can provide their expertise specific to raising money through the crowd as well as their connections with journalists and bloggers. After doing some initial planning and legwork of your own, assess in which parts of your campaign you may need help. This will make it easier to decide if you need any specific crowdfunding consultant services.
Crowdfunding Consultant Question #2: What should I look for with crowdfunding consultants?
Make sure any crowdfunding consultant you hire has actual experience in crowdfunding. A lot of crowdfunding consultants are coming from the marketing and public relations field. There is obviously a lot of overlap but crowdfunding is much more than just a good PR plan.
Someone with a background in crowdfunding along with expertise in business and marketing can provide a more holistic view of your campaign. They need to be able to analyze your campaign against previous successful campaigns as well as develop a crowdfunding marketing strategy.
Be skeptical of lofty promises and all-inclusive campaign management. A lot of crowdfunding consultants like to promise the moon, offering packages of full campaign management and marketing services that will put your message in front of thousands.
Now ask yourself, is a crowdfunding consultant going to really put in the time on my campaign to really build a social community or are they going to have a lot of campaigns running at once and just push buttons? You and your in-house team are the only ones that are really going to care enough to reach out socially and make the campaign a success. Crowdfunding consultants that promise to handle everything may not be able to deliver.
I’ll tell you what often happens with these crowdfunding consulting packages. The link to the campaign gets spammed out on social media pages and forums related to crowdfunding. The problem is that everyone is just dropping links on these pages and none result in any clicks to your campaign or support. It’s just a bunch of crowdfunders and consultants but no supporters.
Ask any crowdfunding consultant specifically what they are going to do and ask for a list of pages where they will promote your campaign. Then click through to those pages to see how many are legit pages and how many are just junk.
Crowdfunding consulting fees are obviously an important point to consider. Most crowdfunding consulting fees range from $50 per hour to well into the thousands of dollars for different packages.
There are a couple of important points here. Don’t expect someone to work exclusively on your project for a few hundred dollars. Estimate that they are probably billing at minimum of $35 an hour and you’ll get an idea of how many hours they might spend on your campaign.
The second point is that most campaigns just don’t have it in their budget to hire a good crowdfunding consultant. If you’re only looking to raise a few thousand to edit and format your first ebook, how much sense does it make to pay a consultant $500 (on top of the 8% in platform and processing fees)? Statistics from Kickstarter shows us that nearly 72% of campaigns have a goal of $10,000 or less.
Your best bet is to work through an ebook on the process (or use this website!), develop your idea and then (at most) seek a one-hour review from a consultant.
Crowdfunding Consultant Question #3: How much are crowdfunding consultants worth?
Crowdfunding consultants usually charge a fixed-price, commission or a mix of each. While knowing what you will be charged up-front is a good start, the consultant may not have as much interest in making your campaign successful.
You’ll benefit by not having to pay higher fees if the campaign raises well over your expectations but fixed charges can add up as well, especially for the crowdfunding consultant adept at upselling you different services.
Paying a percentage of what you raise is tempting because it may align the consultant’s interests better with the campaign. The more the campaign raises, the more they get paid so there is extra incentive for the crowdfunding consultant. Of course, there is no way of telling how effective the consultant’s efforts were and how much the campaign could have raised without their services.
If you do pay a fixed price, the best method is to pay a portion upfront and some when the campaign completes. Even better, if you can negotiate it into the offer, make the second payment contingent on the successful funding of the campaign. A good crowdfunding consultant should stand behind their services enough to take some kind of incentive on the project.
I’m a cheapskate so not always the best person to ask the question, “How much should I pay?” I would cringe at the thought of paying a few thousand to a crowdfunding consultant unless I was sure I could raise at least 20-times that amount.
Don’t forget, the money you raise crowdfunding isn’t necessarily free. Beyond platform fees and payment processing, you still have rewards fulfillment and your time spent. Paying another 5% to 10% in crowdfunding consulting fees may eat into what little profit is left. Unless you are a registered non-profit organization, you’ll also need to pay income taxes on crowdfunding profits above your costs.
From what I have seen offered, most people are best served by keeping their crowdfunding budget small. Put together your own plan and learn everything you can first, then seek the services of a crowdfunding consultant. If they can offer a good audit of your plans and a few add-ons like research and targeted marketing for a fairly inexpensive price, then it might be something to consider.
For the majority of campaigns, those with a goal of $10,000 or less, try to keep your consulting and marketing budget below $500 or 5% of whatever you are trying to raise.
When gold was discovered at Sutter’s Mill in 1848, hundreds of thousands moved west to make their fortune. Many say that the only people to actually get rich were the people selling picks and shovels to the miners.
The analogy is a good one for crowdfunding consultant and promotion services. There are some snake-oil salesmen but there are also legitimate service providers. Just as people like Levi Straus provided a great product during the rush, there are some good crowdfunding services out there that can help you meet your goal. Just make sure they’re not the only ones getting rich.