Crowdfunding may be next major resource for local businesses

Posted by Justin Hesser on May 21, 2012

Main Street investing has taken on a major role in the recent cultural and financial landscape. As more consumers are moving towards local shops and products to supply their demands, some of these merchants may be seeing an increase in investments and funding from the newly government supported crowdfunding avenues.

In order to keep track of these investments, business owners may want to invest in a custom database software to help maintain accurate financial records, especially since the Securities and Exchange Commission recently revamped the stipulations behind how much individuals can donate to small businesses.

According to an article from BusinessWeek, consumers can donate five to 10 percent of their wealth to companies through crowdfunding avenues. Although the SEC still has to set in stone its laws on the way crowdfunding works – which may take years before businesses can start to really profit from the expanded clarity – there are still many ways merchants can use crowdfunding to their advantage.

One such way is through a program called Kickstarter. Although Kickstarter is primarily known for the music and film projects it's been able to fund, there are still many opportunities for fashion, food, design, publishing and technology companies to utilize the tool. The only rules are that the fundraising must be for a project with a start and end date, and if the company doesn't reach its goal within the allotted 90 days, it gets none of the donations. Alternatively, if it reaches or exceeds its goal, it keeps all the donations.

While the SEC figures out ways to ensure that its crowdfunding laws eliminate any opportunities for scamming and con artists, local businesses can use Kickstarter and various other sources already in existence as trusted means for project they may need help financing. So long as they remember to use a custom database software to track all investments and finances in the process.