Crowdfunding a Pastured Poultry Farm
For many people, owning and running their own farm would be a dream come true; however many of these people are never able to achieve their dream because of worries about money. Starting up a new business can be a big financial risk and many people are not confident enough to commit to something if they don’t already have enough experience in the sector. Even if they do have the knowledge and the experience that is required to run a small to medium sized agricultural business, raising the initial capital can be difficult, especially for young people. However, if you are interested in starting up your own pastured poultry farming business, but you are struggling to raise the capital that you need, you might want to consider using crowdfunding strategies to help to start up your own business.
What is crowdfunding?
Crowdfunding is a new way of getting money for a business venture, project or event. Rather than getting capital from a few large investors, crowdfunders aim to get a lot of smaller investments from a larger number of people. Some contributors will only invest a few dollars into their chosen project, however this money can quickly add up when a whole “crowd” of people are investing similar amounts. Some projects end up being supported by tens of thousands of backers.
The money which is given to a business through a crowdfunding campaign can either be an investment or a donation. The funders and the funded should both be clear about whether the money is being donated or invested. This is usually made clear by the funding platform. In some circumstances, the money is “lent” on the agreement that it will be paid back with interest. In other circumstances, the money is used to purchase a “share” in the project. These shares work in a similar way to standard shares that are traded on the stock market. Other crowdfunding platforms give funders the opportunity to gain non-financial rewards for their investments. For example, a funder may be offered the chance to visit the project or they might have something special dedicated to them. Alternatively, they may be offered discounts on the products when they become available.
The “rules” of crowdfunding vary depending on which funding site is being used as the conduit. Most sites require the project to set a campaign end date by which point the campaign target must be reached. This helps to prevent a funding campaign from going on indefinitely. It is normally only possible for the recipient to access pledged funds once the target has been met or when the campaign end date arrives. Some sites will return funds to the potential funders if the target amount is not met by the campaign end date. This can help to prevent people from investing money into projects that never even make it past the planning stage. For this reason, potential poultry farmers must think about realistic funding targets. When you are setting a funding goal, you should only ask for the minimum amount that you need, or else you may not get any money through at all.
In the social media age, crowdfunding makes a lot of sense. People are able to use crowdfunding sites to connect with potential investors from all over the world. These sites give an increasing number of people the chance to set up a business, as they offer funding opportunities to people who may not have previously been able to access them. Many of these people would have been excluded from using traditional funding sources, such as business loans, because of circumstances beyond their control. Crowdfunding allows for increased social mobility in areas where business was previously dominated by groups of elites. If you have had trouble gaining access to these funding sources in the past, then crowdfunding may be the right choice for you pastured poultry project.
If you want to use crowdfunding to raise capital for your project, you will need to find the right website to work with. Getting the right site for your needs can help to make it much easier for you to build your project. Using a big name crowdfunding site will also help to give more credibility to your project, as these sites normally feature certain safeguards which are designed to protect potential investors. Some of these sites have different approaches to crowdfunding, so you should thoroughly research the way that the site works before you commit to using it for your farm funding project. Here are some of the bigger names that you could consider for your future crowdfunding projects:
Kickstater is probably the most well-known crowdfunding website. Hundreds of millions of dollars have been invested in tens of thousands of projects via this site. The name of the site has also become synonymous with crowdfunded businesses. The search function on the website allows investors to search for the projects that they are most interested in. Use lots of keywords in your project brief to help people to find your site via the search function. You can also set multiple price points to allow you to offer different rewards to different levels of financial backer. There is a 5% fee for every successful project, so you should take care to factor this into your target amount.
GoFundMe is a great site if you are looking for donations to help to fund your farming project. With GoFundMe, you can access your donations at anytime and you are not required to set a fixed target goal for your project. However, using GoFundMe does not offer as many options to backers who are seeking a return on their investments. This could put off some potential investors, who may not want to put money into an idea without some sort of return. The fee level that you will pay for using GoFundMe can depend on what type of project you use and what withdrawal method you choose to use. The base fee is 5%, with an additional payment processing fee of up to 3.5%.
Pozible is a crowdfunding site which pledges to help people to create “awesome stuff”. It is a great crowdfunding site for young farmers, because it is known for working with a lot of quirky and unusual start-ups. Pozible offers fundraisers the choice to start a flexible project (where fundraisers can access their funds without meeting a target) or an all-or-nothing project (where fundraisers do not get anything if they do not meet their goal. The fees that you will be required to pay depend on the amount that the project raises. The less money that is raised, the higher the fees are, starting at 5% for projects up to A$100,000, and dropping to as little as 3% for projects that are worth over A$500,000.
Indiegogo is very similar to Kickstarter in format and layout; however you are able to start projects for donations as well as rewards. On Indiegogo, the rewards for investors are known as “perks”. Flexible Funding options are available for campaigns; however the website charges a much higher fee for those who are hoping to use this option. Basic fees start at 4% and rise to 9% depending on the circumstances of the project. There is an additional fee for campaigns which are started outside of America, so this may not be the best website for potential farmers in Australia to use.
Who should consider crowdfunding?
Crowdfunding is suitable for anyone who wants to start or expand a business; however it is best for dynamic young people who may struggle to get a bank loan or a financing through a traditional funding source. Most of the big name crowdfunding websites do not place any restrictions (other than some geographical restrictions) on who can start projects. However, some websites do place restrictions on the types of projects which can be funded. Make sure that your project is eligible before you put the project online, because ineligible projects can be removed without prior warning. Crowdfunding is better for those who are looking to start a small or medium sized business, because target funding levels are far more achievable.
What to do before you start crowdfunding
Before you create your farming project on a funding website, you should spend a lot of time planning what you want to do and how much money you will need to raise to start the business. Creating a business plan for your venture is just as important when you are crowdfunding as it is if you are trying to secure a loan from the bank or from any other big investor. You won’t normally need to post your full business plan on the crowdfunding platform, although some people may ask to see it. Having a solid business plan will help to give you peace of mind that you have properly planned out how your business is going to operate.
As part of your business plan, you will need to consider what you are going to do, how you are going to do it, and what it is going to cost. If you are planning on starting up a pastured poultry business, you will need to remember to include financial information for everything from the cost of additional feed through to the cost of packaging and shipping your final products. You even need to remember to factor in overhead costs, such as the electricity that you will use to power any machinery that you use. Ask yourself a lot of questions whilst you are making the plan, such as “once you have products to sell, how are you going to encourage people to buy them?”. Do plenty of market research before you begin crowdfunding, so that you can work out the best way to market your product to consumers. You should also think about timeframes and consider how long it might be before you are able to start making a profit. Considering all of this will allow you to plan for the future and reduce the chances that you are hit by unexpected outgoings.
If you are offering rewards, perks or incentives as part of your crowdfunding project, you must remember to factor these costs into your business plan. There have been a few instances where ill-prepared crowdfunders have ended up going bankrupt because they could not cover the costs of the rewards that they had promised to their backers! Make sure that the cost of the reward offered is much lower than the donation rate that you have set. If possible, choose appealing none-financial incentives that are easy to fulfil but worthwhile to receive.
Your business plan must be realistic and achievable, or else you will be setting yourself up to fail. Most new start-ups will start small and then gradually grow their business. If you do decide that you want to expand further once your business is established, you can always start another crowdfunding campaign to help to fund this expansion.
Crowdfunding a Poultry Farm
Chicken caravans are a great choice for people who are looking to start a new pastured poultry business through a crowdfunding campaign. These vehicles offer new farmers far more flexibility and legal freedom than permanent poultry barns offer. This means that new business owners end up spending much less time and money on the legal wrangling that are involved in building a permanent barn on a proposed site. It is even possible to move a chicken caravan to rented land, if you need to do so, which means that you will have far more freedom when it comes to grazing your birds.
Mobile chicken caravans are also a great choice if you want to raise happy and healthy chickens. Even the most basic caravans come with a range of different features which will help your chickens to be happy egg layers. These vans include special laying areas, so that your chickens will feel safe and comfortable when they need to lay their eggs. Food and water is also dispensed from the trailers to supplement the natural food that is available in the pasture. You can tailor the amount of food and water available to meet the welfare needs of your chickens. Choosing the right area for your birds to lay their eggs will help you to minimise the loss of birds to disease and predators, as well as helping them to produce a better quality of product.
These caravans are also a cost-effective choice for those who want to go into pastured poultry farming. It is possible to home and transport hundred of birds in one of these trailers. This is ideal for those who are looking to start a new business from scratch. Your investors will love the idea of homing your birds in an ethical, low cost environment because this will help to give them a taste of how you will use the money that they invest.
Good Practice for Crowdfunding a Project
- Find a Unique Selling Point
One of the best ways to encourage investors to choose your farm over any other farm is to make sure that you have a unique selling point (USP). A unique selling point is something that sets your project apart from other agricultural or poultry farms that might appear on crowdfunding sites. This USP can also be used to appeal to consumers once you start to sell your products. It may involve the way that you farm, the breed of livestock that you rear, the way that you package and distribute your product, the ways that you choose to reinvest your profits, and many other things.
Once you have decided on your USP, you will need to set it out clearly within your product pitch. Explain why potential investors might be interested in your particular idea. If appropriate, you may want to talk about ethical benefits as well as financial benefits to investors. Not all investors are motivated by the possibility of a good financial return on investment; many crowdfunders are actually more concerned with supporting projects that they feel passionately about.
Animal welfare is becoming more important to people across Australia and around the world, so many new farmers try to sell themselves based on their animal welfare credentials. If you want to sell your ideas based on the way that you intend to treat the animals on your new farm, you should make sure that you have a proper understanding of the welfare considerations that you are talking about. Many investors are astute enough to be able to see through crowdfunding proposals that are all show and no substance. What is more, you may actually be committing a crime if you willfully mislead investors with your proposal and have no intention of fulfilling your ethical promises.
- Create a Buzz
Although many of the biggest crowd funding sites have search engine functions, you will probably only receive a small amount of web traffic via this method. If you want to drive potential investors to your website, you will need to create a buzz about your farming project. Ask your family to start spreading the word about your ideas. Most crowdfunders will receive their first investments from friends and family members; however you should not expect them to carry your project. In many cases, the help that they can give you to spread the word can be more valuable than the financial support that they are able to give. Use your own social media account to tell all of your followers about your planned projects. Make sure that you include a link in all of your posts so that potential investors can get to your page with ease. Encourage other people to share your link on their pages too, so that their network is able to see it as well. Regularly post updates and follow-on information to help to keep the project in the foreground and to give people the opportunity to respond to your idea if they missed the information the first time around.
It is also important that you raise your profile outside of your extended social network. Larger projects, such as starting a livestock or poultry farm from scratch, will only be successful if they are able to attract a large number of backers. Even if you have a lot of friends on social media, it is highly unlikely that they will all back your project. This is why you will need to look outside of your primary circle. Speak to the local media to see if they would like to do a feature on your attempts to raise money to start your poultry business. The media will be far more interested in doing a piece about your story if you have a good USP. Sharing your story in this way can help to get you noticed by thousands of local people who may go on to be your future consumers.
- Make a video
If you have the capability, you should consider making a video to go with your crowdfunding project. A video can help to add a touch more humanity to the appeal and can help to build an extra layer of trust between yourself and your investors. The video doesn’t have to be polished or professional, as long as it helps to provide backers with more information about who you are and why they should invest in you.
- Mixed Funding Sources
If traditional funding sources are available to you, you can always consider using these sources in addition to crowdfunding. For example, you can take out a smaller loan to help to fund a percentage of your project and then fund the rest using a crowdfunding website. This is beneficial in two ways; namely that it is often easier for people to get smaller loans from the bank, and it will be easier for you to meet your crowdfunding target if your target is a smaller amount. If you are using an all-or-nothing approach, then using mixed sources of funding may be the most feasible option for you.
For more info on funding your Pastured Poultry Business or our range of innovative products, please contact us.