Kickstarter is often hailed as the Hail Mary of entrepreneurial endeavors. It is the place inventors, entrepreneurs, designers and dreamers go to when everything is on the line.
This is what makes crowdfunding so exciting. Backers everywhere become a part of the journey, the mission, the dream of the entrepreneur and help to bring creatively simple and simply creative products into the world.
It is a win-win situation in which both parties feel an amazingly strong and satisfying sense of success. It is this that makes Kickstarter magical. We feel as though we have won and success is assured.
This is wholeheartedly false however. The hard work has barely begun.
Life After Kickstarter
Let’s say you poured your heart and soul into your Kickstarter campaign and were rewarded with a resounding success. Even after the amazingly long and tedious process of finalizing manufacturing, packaging all the products and shipping out to all your backers the business is just beginning.
Now don’t get me wrong…you have accomplished a great deal. Anyone who puts out their own crowdfunding campaign and pours their blood, sweat and tears into making it amazing is an absolute boss in my book.
But do not let past successes go to your head.
Complacency not curiosity surely killed the cat.
What do you do next? That is the big question. Too many makers out there fail to fully capitalize on their creations. They work it in their campaign, raise funding and build a business out of it but take it no further.
Rather than striving to grow and market their invention many would rather create anew and Kickstart their dreams once more.
We all do what we know best. But to make the most out of your product and to effect the greatest grouping of individuals effort must be continually poured into the company. You need to decide which road to take.
When you think of business you almost assuredly think of retail first and foremost. Going retail is the process of selling your goods in other people’s stores. From international chains like WalMart and Staples to tiny little mom and pops, owners everywhere are looking for profitable products to offer in their stores.
While may of you may have heard that retail is dead this could not be further from the truth. Although online sales continue to skyrocket as more and more consumers are evermore exploring the interwebs to make their product purchases and perusing online inventories, retail is still the strongest and most powerful player in the business world.
In order to enter this arena it takes a great deal of grit however. Retail can be brutal. Shelf space is hard to come by and your products must make it worth their while in order to carry.
It can also take plenty of prodding to get the opportunity to shine. Typically the prolific places of retail all offer trial periods to screen potential products for profitability. You will need to reach out to local stores and sell their managers on the potential placement of your goods for a test run. If all goes well company big wigs decide whether or not you roll out into additional stores or will be relegated to ruin.
There are many other challenges in the retail environment as well. Because retail stores need instant inventory you must work closely with sales and distribution to get everything to where ever in the world it is needed. Most entrepreneurs hook up with distributors or people placed to push your products out to other avenues and grow the list of retailers offering your goods. This of course eats further into the already reduced profit margins that go along with wholesaling.
The last and possibly most damaging effect of retail business is the payment terms which put entrepreneurs in a pickle and make it challenging to grow and scale a company. Typically retailers pay on Net 30 or Net 60 day plans meaning you don’t get paid for inventory for at least a month. Your company will need to float all that additional overhead which makes growing and expanding organically pretty tough to do.
For those of you feeling upset by the insanely large number of challenges with brick and mortar shops take solace in the fact that only about 6% of annual retails sales are actually taking place online. Inordinate amounts of money are still being dropped in retail spots all over the world and can make you a fortune with proper placement, products and advertising.
Note: Retail is a tough cookie to crack. This route is best for products with high margins and also appeals to the truly visual creations consumers cannot help but examine.
In a sense ecommerce is everything retail is not. In a new age where people are starting more and more to trust online transactions and the barriers to entry are increasingly lower to starting an online store you must maintain an ecommerce presence to proceed.
With Shopify and other hosted ecommerce solutions it is getting to be too easy to embark upon an ecommerce adventure. And if you had a Kickstarter campaign fund you clearly have a product worth pushing. Spend a weekend getting an online store up and running and at least you are not missing out entirely on the benefits of online business.
But there is so much more you can do in addition to owning your own store. Wholesaling online is really revolutionizing business and allowing entrepreneurs to succeed with significantly less capital than before. By reaching out to other site owners in your niche you can take a play out of retail and offer to offer your products on their sites.
The beautiful part of this is that no shelf space is wasted. No longer must minimums be guaranteed in order to access exposure or terrible terms be set shipping out products. By signing up dropshipping merchants willing to work for poorly pathetic margins you open yourself up to a massively developed networks of individuals able to sell and market your products. If you would rather maintain complete control over the business then adding affiliates to refer potential prospects is your next best bet.
Creating your own products goes even further though. Ebay, Amazon and other developed channels for mass market products become empowering agents for you and reaching immensely larger audiences. Unlike for ecommerce owners selling other people’s products these platforms become a well oiled piece of your business arsenal. Rather than undercutting they work with you to move much greater inventory in relative ease…all without having to worry about distribution.
Note: Ecommerce involves shipping…a lot of shipping. For larger, heavier items it can be tricky to make this process profitable. Generally ecommerce is slightly more accommodating than retail and can afford lower margins while still staying profitable.
The IP Play
Sometimes serial inventors don’t make the best entrepreneurs. Many of the creatively inclined prefer the whirlwind of excitement and invigoration that come with creating new and innovative products but hate the hassles of taking a product to market.
For innovators like this there is hope in the face of obscurity and it comes in the form of patents and intellectual property. Assuming your idea or invention is worthy of protecting and original enough to qualify for a patent you could conceivably enter the process of licensing your work out to others.
Licensing is a potentially lucrative and highly appealing business model as there is virtually no work left to be done by you, the inventor. It is the proverbially passive income stream so many seek. But finding companies willing to license and sell your technology is no small feat in and of itself. Kickstarter helps however. Typically in order to receive an agreeable licensing deal companies wiant to see traction. They need to know if a revolutionary product will sell before investing heavily in producing and marketing it.
Here is where the support and success of your campaign come in. It is the credibility upon which you pitch a product. Keep in mind of course that with this method you must purchase the often costly protective patents to guard your ideas. Additionally, your compensation will be much reduced due to your lessened risk in the endeavor.
Despite all this however licensing agreements can be amazing, especially with manufacturer guaranteed minimums which you of course should push for in in royalty deal. So if you are the proverbially inventor only interested in building and beautifying a product with no intention of building a business this may be your best bet. For more on patents, patent trolls and the all important royalty rates check out this post.
Note: Occassionally offering exclusive licensing deals results in sexier royalty deals. Consider playing competitors against each other to get the greatest bang for your intellectual buck.
I am almost hesitant to include buyouts in a list such as this to inform Kickstarter creators but it feasibly is an option for entrepreneurs out there.
Although company acquisitions at the Kickstarter level are rare if not non-existent in this day and age it could be a route to powerfully profitable success in the future. I wouldn’t hold your breathe in expectation of selling out to a corporate company or even seek out such a step as the experience of your company is tiny at best but it makes sense in some instances.
When looking for quick cash influxes it could potentially benefit campaign creators to reach out to larger(not collosal) companies in your industry to discuss acquisition. In all likelihood they will laugh in your face but I foresee a future where smaller companies just out of crowdfunding are quickly snatched up by bigger brands too boring to innovate.
Food for thought and debate I suppose. Any opinions out there?
Today we walked down the path of profitability to explore several ways in which Kickstarter creators can follow up their campaign success for future growth.
Each scenario speaks to slightly different individuals but ultimately there are always options. Take advantage of Kickstarter success to seriously build something great. Whether licensing out an awesome new product for passive income, getting stocked up in mega stores like WalMart or pursuing an online approach and making it rain every strategy certainly has strengths and weaknesses to consider.
What have other Art of the Kickstarter inventors done? Would love to hear strategies, successes and failures any and all out there have had with post-Kickstarter business. What worked, what didn’t? Thanks guys and hope you enjoyed it.