Crowdfund Investing For Dummies
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When you’re creating a business plan for your crowdfund investing opportunity, you have to determine what results you’re aiming for. In the case of a brand-new or very young business, chances are, those results center around growth markers: increased sales, an expanding customer base, and so on.

Unfortunately, what you envision when you’re in the planning stages isn’t always the best result when your business is actually up and running. Maybe your growth projections were so aggressive that the quality of your product or service is melting down in the effort to meet them.

Perhaps you realize that for the long-term health of your venture, you have to adjust your short-term desired results. (The same thing happens in our personal lives. Have you ever gone on a diet with the goal of losing some outrageous amount like ten pounds in a week, only to realize that you’re doing more damage to your body than good?)

Choosing the wrong results is a painful thing to admit; no one likes to be wrong. But it happens to lots of businesspeople — even really good ones! The way to make sure you’re one of the good ones isn’t to avoid mistakes altogether; you can’t. Instead, it’s to be proactive in the face of a mistake.

Here are four things to do when you choose the wrong results:

  • Be humble and tell yourself that you were wrong.

  • Try to figure out why you made the mistake.

  • Pinpoint what you’ve learned from the mistake.

  • Inform your crowd as soon as possible about the mistake, what you’ve learned, and how you’ll correct the situation.

Crowdfund investing demands transparency. Investing in a startup or a small business is a huge risk; if someone invests in ten such companies, statistics tell them that five are likely to fail. You must do everything possible to be open and honest with your crowd so that they trust you.

Otherwise, if someone in the crowd smells a cover-up, the suspicion will spread quickly, and you may find yourself face-to-face with an investor revolt.

About This Article

This article is from the book:

About the book authors:

Sherwood Neiss, Jason W. Best, and Zak Cassady-Dorion are the founders of Startup Exemption (developers of the crowdfund investing framework used in the 2012 JOBS Act). They deeply understand the process, rules, disclosures, and risks of capital formation from both the entrepreneur's and the investor's points of view.

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