Should You Crowdfund Your New Yoga Studio Business?
The reality of the yoga industry is that the market is saturated and starting a new studio business is expensive. Most successful studio owners didn’t have money fall into their lap to make their studio dreams into reality–– they either had to scrape together their personal funds, had help from very generous family or friends, or get loans from the bank with high interest rates. And there aren’t really investors putting money into yoga businesses in this market.
The good news is that there’s another creative option available: crowdfunding.
Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people, typically online. So rather than getting a risky loan from a bank or breaking your own bank to get your studio up in running, you can instead raise funds online from the public. Sounds kind of amazing, right?
Well, like with nearly anything that has to do with money, there are pros and cons. To help you make sense of crowdfunding and whether its an option that makes sense for you and your studio, we’ve made a list of pros and cons:
1. Increased Exposure
Crowdfunding can help you spread the word about your business and be used as a vehicle to promote your brand. It can also help you deliver your idea to potential backers who might not otherwise have known about your studio. It’s basically free PR!
2. Easy to Set Up
Crowdfunding platforms are built on user-friendly technology. This makes it easy to set up and launch a campaign.
3. Low Risk
Crowdfunding doesn’t take much of an investment– if any –upfront. For example, the crowdfunding platform Kickstarter does not require you to come through on the rewards you promise your backers unless you reach the funding goal.
4. Helps Builds a Supportive Community Online
Sharing your exciting idea for a new studio should be fun right? Sharing the excitement around launching a new studio not only builds hype but can also build a community that can actively support you. A crowdfunding campaign can help build this type of community around your studio. You know you have a supportive community when they back you financially–– that’s some incredible validation of your studio.
5. Can Reap the Benefits of Small Donations
Before crowdfunding was actually a thing, being able to leverage small donations toward a larger total fundraising goal wasn’t feasible. Now with crowdfunding, instead of taking large amounts of money from a few people, you can obtain small amounts of money from many people.
6. Does Some Demographic Research For You
Researching your demographic is incredibly important when opening a new studio. Once you have a list of backers from a crowdfunding campaign, you can use them as a data source for how to market your classes. It’s difficult to find a better list of engaged users who are interested in the launch of your studio. At the end of the day, people vote with their wallets. They pay for what they truly want.
7. Super Social Media-Friendly
Launching a campaign to promote and fund your studio creates a buzz that’s very shareable on social media. Oftentimes, your backers will share the news of your studio with their social networks which result in more exposure for your crowdfunding campaign.
8. Negative Cash to Cash
Negative cash to cash is when you receive money before you deliver services. You have a comfortable amount of funding–– not from your own personal money ––that allows you to deliver on launching your studio with reduced risk. And did we mention, it’s not out of your own pocket?
9. Transparency and Accountability with Backers
Crowdfunding platforms make it easy to communicate with your backers and update them throughout the process of launching your studio. Plus, backers can provide you with valuable feedback on your studio business and campaign.
10. Saves You Time
If your idea to open a new yoga studio is not a good one, you’ll find out quickly because no one will back your campaign. Sure, it sucks, but it will also save you a ton of time compared to working hard to launch a studio in a saturated market and then failing because you didn’t have the support of a market. Crowdfunding also allows you to get funding in less than 30 days–– it’s a very quick way to raise money and get started on your launch.
1. Campaigns are Time Investments
Although this may take less time than traditional fundraising, running a campaign is still a serious time investment. It requires a lot of planning, marketing, and communicating. Be prepared to set aside ample time for this if you do choose this option for funding your studio.
2. There’s Still a Money Investment Involved
While some platforms allow you to launch a crowdfunding campaign for free, you’ll still have to put some money into the planning of the campaign and the marketing materials (IE. videos, Facebook ads, content, etc.). You should really have a budget for the campaign before you initiate crowdfunding. How does that quote go? “To make money, you got to spend money.”
3. Tons of Marketing
Like with any fundraising campaign, you can’t just create a crowdfunding campaign, let it sit, and expect to collect funds. You have to market and generate exposure for your campaign for people to know, care, and then be convinced to donate.
4. Delivery and Accountability
If you successfully raise money for your studio, you actually have to deliver the launch of your studio to your backers. That can be a lot easier said than done, and if you don’t plan well initially, you can end up with adhering to the timeline you set out to follow. What follows is an embarrassing exchange between you and your backers about why you haven’t been able to deliver on your studio launch as planned. And that says a lot about the future success of your studio–– if you can’t follow a timeline for launch, how will you fare in developing and executing future business plans?
5. Risk of Failure
Whereas a “pro” of crowdfunding is the large exposure you can generate for your campaign, the “con” side of this is that if you fail, you fail very publicly. But don’t let this discourage you–– one failed campaign is not the end of your new yoga studio business. Many who use crowdfunding will take time after a failure to make revisions and improvements to their campaign and try again.
If you’re launching a campaign, you most likely have to pay a fee to the platform where you’re hosting the campaign. It’s not usually an expensive fee, but it’s important to note that not every penny you raise will go to your studio launch. The platform has to earn their keep somehow.
Most crowdfunding platforms, understandably, have strict rules you need to follow. This means you have to relinquish some control of the way you’re running your studio launch campaign. Kickstarters’ rules, for example, require that projects have tangible things to share–– so you have to be able to provide your backers with some sort of retail product as a reward for backing the launch of your studio.
8. Less Flexibility
Once you’ve launched your crowdfunding campaign, you’re making specific promises to your backers that have to be delivered on. That makes it difficult to make major changes to your studio plans as you work toward opening your studio. So it’s best to have a very solid plan before launching a crowdfunding campaign.
Since you’re introducing your studio idea to the public before it’s finished, you run the risk of someone stealing your specific vision and executing quicker or better than you. And all that will really matter in the end isn’t whose idea it was first––what matters is who executed that idea the best. Crowdfunding ideas can be stolen legally unless patented.
10. Delayed Access to Funds until Campaign’s End
Most crowdfunding platforms don’t allow you to access the money donated until the end of the campaign. So you can’t begin to draw from these funds to start on your studio launch, you have to wait until the duration you’ve set for the campaign ends.
So Does Crowdfunding Your Studio Make Sense?
Crowdfunding may make sense for some studio projects and not make sense for others. Only you can truly decide if it makes sense for your new yoga studio. Do some research: are there crowdfunding projects related to yours that have been successful? Are you in a niche that you can market on a crowdfunding platform?
Do you have any experience with crowdfunding for a studio? We’d love to hear about your experience in the comments!