Another Source of Small Business Funding
Crowdfunding seems to still be popular despite mixed reviews on how successful (or unsuccessful) it was for many funds-seekers.
However, to me, there always seemed to be a pattern develop within each of the peer lending sites, that favored “creative” or “social” projects far better than other kinds of new business ideas.
Perhaps, that explains the apparent success of Kickstarter, a crowdfunding site just for creative projects—and only for creative projects. Kickstarter was founded in 2009 as an online funding source for filmmakers, designers, musicians, and other types of artists.
Interestingly, the people who provide funding for these projects are actually “contributors” rather than “investors,” because they receive no return on their investment or equity in a project. However, they are usually promised some token award—a personal phone call thanking them, a copy of a CD, a T-shirt, dinner with the artist, or some other token related to the project.
Some filmmakers offer contributors over a certain threshold a “credit” in their film as “Executive Producer.” One filmmaker promised to make a personal call to anyone contributing $10 or more. He is still working on his list of over 3,000 names.
The amounts sought after range from a few hundred dollars up into six figures for Indie films. Filmmaking and music seem to be the big attractions with over 3,000 films being funded. Of these, several have passed the $100,000 level, with one film raising over $345,000 (they were only seeking $125,000).
Here are some statistics about the success ratios of project requests after only two years of operation (all statistics are current as of July 17, 2011):
- The 10,000th successful project was funded on July 6, 2011.
- Total number of Project Requests = 26,620.
- Total number of Successful (funded) Projects = 10,388.
- Total number of Unsuccessful (not funded) Projects = 13,113.
- Live Projects = 3,119
- Success Rate = 44%
- The number of projects funded in Kickstarter’s first year is exactly the same as the number funded in the MONTH of June 2011 (1,044).
- Music topped the list of successful projects with 3,110, and Filmmaking was second with 3,048. (Music and filmmaking dominate with 60% of all successful projects.)
- There are 13 categories of projects with Fashion being no. 13 at 119 projects.
- Total dollars pledged since inception = $75 million.
- Dollars collected (successful projects) = $60 million.
- Dollars uncollected (unsuccessful projects) = $9 million.
- Live dollars (currently funding projects) = $6 million.
- Total number of backers = 793,362
- Number of Repeat backers = 118,308. Repeat backers make up 13% of the total number, but 28% of the total dollars pledged.
- The Staff of Kickstarter also back projects, and as of July have backed 2,168 projects. It seems the people at Kickstarter believe in their own products.
There are obviously people out there who want to support the arts and are willing to contribute money to do so. This is likely why Kickstarter has succeeded where other crowdfunding sources have failed—or somewhat failed.
The funding process works by the artist creating a short video pitch, posting it on the Kickstarter website, and setting a fundraising target and time frame. It is an all or nothing arrangement. A project must reach its funding goal within the time specified by the artist, or no money changes hands. When goals are met, the money is collected from the contributors, Kickstarter keeps 5% plus credit card merchant fees (through Amazon) of around 3-5%, and the rest is passed on to the project creator.
So, if you are the creative type of small-business person looking for funding for your project, you just might want to consider Kickstarter. Who knows, there may be a patron out there somewhere who is taken by your passionate presentation and starts the ball rolling on funding your project. Just remember that it will be the quality and content of your video that attracts the patrons.
You can visit Kickstarter.com to find all the information you need to get started. It is worth the visit to the site just to see some of the videos that people have sent in requesting funding—some of them are very good. Check ‘em out and let me know what you think.
Note: I have no connection whatsoever with Kickstarter.com. This article is information for small-business owners, snd is provided as a service only.
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Bright Idea For a New Business
It looks like the incandescent light bulb is going the way of the dinosaur. So, instead of lamenting its demise, let’s see if we can’t garner an idea for a new business out of this change.
What does the incandescent light bulb produce? Obviously, it is light and heat. I just saw some “expert” on TV say the incandescent bulb converted electricity into 10% light and 90% heat. Now, with the advent of the new energy efficient bulbs, a little electricity is converted into more light—and the heat is practically eliminated.
And therein lies the idea for a new business.
Incandescent bulbs are (were) used as heat sources far more frequently than one might realize. For instance:
- When I was growing up and living in northern Michigan, I couldn’t afford to install an electric engine heater in my car for cold winter mornings, so I would simply lay a mechanic’s “drop light” on the intake manifold of my car, with a 60 or 75 watt bulb in it. This would keep the manifold warm enough to easily start my car on below-zero mornings.
- I lived for several years in southern Nevada and, because it was the desert, we kept the drip irrigation system running year around. Unfortunately, the temperature occasionally dropped below freezing at night and the exposed portion of the irrigation system would freeze…and break. I solved the problem by putting a fake plastic boulder over the pipes and ran an extension cord with a 5 watt bulb under the fake rock. I would leave the light burning all winter and never had another problem–even with temperatures in the low teens.
- When our kids were growing up we owned a farm and it seems we always had baby chicks, ducks, quail, or whatever that needed to be kept warm and dry. So, we would put the babies into a box or enclosure—along with a small light bulb for warmth.
- People are still using electric light bulbs for a small amount of heat in chick brooders, and the like—wherever the typical large “heat lamp” may simply be too hot.
I could recite many more instances where light bulbs are being used for heat sources all over the world, but the point is: the incandescent bulb is going to be missed by everyone who ever used them for their “heat” value, rather than their “light” value.
So, here is an idea for a new business. Design and build (or license) a small “micro-heater” to replace incandescent light bulbs wherever they are (were) used as a heat source. Probably something that produces 5 watts to, say, 300 watts of heat—well below the 800 watts to 1,500 watts produced by today’s portable electric heaters. These micro-heaters could either be plugged into a wall outlet, or screwed into a light socket.
Sounds crazy? Well, many people thought the invention of the transistor would be the demise of the vacuum tube, but just Google “vacuum tubes” today and see what your results are.
Bright idea…or a fool’s folly? Only time will tell—if anyone out there is innovative enough to try it.
Any other bright ideas for a new business?
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For Small Business…It Never Stops
Breezing through the mass of federal laws that are constantly being introduced in Congress, I came across this piece of work that was introduced on July 6, 2011:
H.R.2411 – Reduce America’s Debt Now Act of 2011
To provide for an employee election on Form W-4 to have amounts deducted and withheld from wages to be used to reduce the public debt.
This bill is a perfect example of how far out of touch the members of Congress really are when it comes to small business. Here are the key parts of the bill, as they now stand.
SEC. 2. VOLUNTARY WITHHOLDING FROM PAYROLL FOR REDUCTION OF THE PUBLIC DEBT.
(a) In General- An employee may elect for an employer to deduct and withhold upon the payment of wages by such employer amounts to be used to reduce the public debt.
(b) Requirement of Withholding- Every employer making payment of wages shall deduct and withhold upon such wages any amounts so elected, and shall pay such amounts over to the Secretary of the Treasury at such times and in such manner as the Secretary shall by regulation prescribe.
So, if you are a small business owner and any of your employees decide it is their patriotic duty to help pay off the government’s debt—a debt they did not help to create—it becomes your responsibility to provide the means for them to do that.
That will require your small business bookkeeping department to handle all the paperwork, deduct the money from the employee’s wages, account for the money, maintain the records, send the payment to the Treasury department, and adhere to all the filing requirements that always come with bureaucratic boondoggles.
Since the IRS would obviously become involved, you can be sure that there will be a number of regulations and penalties for improperly filling out the forms, late filings, or other technical mistakes. Just what every small business owner needs right now.
Oh yeah, one more point of interest…the contribution is not tax deductible.
The Secretary [of the Treasury] shall include on such [withholding] certificates a reasonably conspicuous statement that any amounts deducted and withheld from wages under subsection (a) are not deductible as charitable contributions for Federal income tax purposes.
Here is the sponsor of this bill (his first creation since being elected to Congress):
Rep. Rick Crawford
Republican • 1st District, Arkansas • 1st Term • Sworn In 2011
Current Term 2011 – 2012
The National Restaurant Assn was one of the largest contributors to Crawford’s election, and now every restaurant owner in America (with employees) may have more bookkeeping to do, money to withhold, government forms to fill out, and regulations to follow if this bill passes. This may impact, directly or indirectly, every restaurant owner’s decision to hire more people, and/or hold down prices.
Crawford’s district is largely agricultural, so every farmer (with employees) who voted for him could be subjected to more government rules, regulations, and bureaucratic paperwork.
Of course, this is also the case for all farms, restaurants, and every other small business in America. It could hit the smaller firms, with 100 or fewer employees, the hardest, which is 98.2% of all employer firms in the U.S. Smaller firms usually have smaller staffs that are already overworked.
I cannot believe that the good folks in Arkansas would allow someone so out of touch with reality to represent them for another term in Congress.
More importantly, are there any small-business people in the U.S. who even care that people like this are constantly writing laws that make running their business more difficult??
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A New Demand for an Old Industry
This subject would not have caught my attention had I not just read about how rich the executives of big companies were becoming…while everyone else was moving backwards. A recent article in the Huffington Post pointed out that the executives of S&P 500 publicly traded companies had pay increases of more than 28 percent in 2010, over 2009, while rank-and-file workers are at the same place they were in 1980. This doesn’t count all the other new millionaires made within partnerships, and non-S&P 500 big businesses.
So, I guess it should be no surprise that a nearly extinct (at least according to media attention) industry has been resurrected and made fashionable again. I’m talking here about “professional domestic service.” All of a sudden the domestic service industry in the U.S. is taking off to try and meet the demands of the new wealthy.
Of course, the “domestic service industry” has a long and prestigious history dating back centuries. The industry is steeped in pride, because not just anyone can be a professional butler, chauffeur, housekeeper, governess, personal assistant, houseman, laundress, or chef (emphasis on “professional”).
That is why Christopher Ely, former butler and estate manager for the powerful figure of Brooke Astor, teamed up with Manhattan’s “French Culinary Institute (FCI)” to form the “Estate Management Studies” program. This new program is now a part of the FCI overall curriculum, and is directed by Christopher Ely.
The training is not cheap. They currently have five different special curriculums set up and they cost about $1,750 for each class. More detailed culinary training is more costly. However, Ely doesn’t think his school will have any problem attracting students, since the demand for “trained” people is rising so fast, because, in the words of professional butler, Charles MacPherson: “The rich just want to live like rich people.”
At the same time, the rewards can be substantial, Professionally trained domestic staff can make a very good wage. Ely says a “good” butler should make about $80,000 per year in base salary.
So, for everyone out there who is unemployed, maybe this is something to consider. Professional domestic service is an industry that prides itself in a long history of integrity, professional service and financial success.
For specific information on “Estate Management Studies” at “The French Culinary Institute,” click here. They have classes in both New York and California.
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