Hartford Business Journal

www.HartfordBusiness.com February 6, 2017 • Hartford Business Journal 21 BIZ BOOKS Tips to run a successful crowdfunding campaign "A Crowdfunder's Strategy Guide — Build a Better Business by Building Community" by Jamey Stegmaier (Berrett-Koehler Publish- ers, $19.95). While many small businesses turn to crowdfunding to raise funds, not many attempts are successful. Stegmaier's seven successful Kickstarter campaigns, and the suc- cessful and failed attempts of others, helped him create a crowdfunding template for increasing the odds of suc- cess. Here's what you'll learn: Developing a platform for your launch will take months, not days. Look for information about similar products online (e.g. product sites, crowdfunding sites, sell- ers, blogs, trade publications, YouTube, etc.). Note their fea- tures; read their reviews. Iden- tify your unique value. At least 90 days prior to launch, start building a network to spread the word. Start with a weekly blog (one to three entries per week) that creates interest in your product and provides content useful to its readers. They'll tell others. Subscrib- ing to other blogs related to your project and providing comments helps you build a following for yours, too. Send out samples of your product to serious followers and others with whom you've had close interaction; solicit and listen to their feedback. Closely study crowdfund- ing campaigns that deal with customer demographics simi- lar to those of your product. Pay close attention to their models. Look for their "how." Offer feedback on preview pages; provide comments on campaign pages. Backing some projects helps, too, because you'll gain insight about timelines for delivery. Create a budget for your project factor- ing in a number of different outcomes rela- tive to being able to meet demand on time and ship worldwide. Also remember that you'll have to account for collecting and paying state sales tax on online sales. Pay close attention to production scheduling; you don't want disappointed customers. Stegmaier's experience shows that a "keep it simple" approach to your product makes for successful campaigns, too. Adding more options from which backers can choose usually creates problems with manufactur- ing, cost control and on-time fulfillment. You also have to decide how much money you need to raise. Don't expect crowdfunding to cover the expense of a product launch. There are no guarantees that the project will reach its funding goal. Have enough financial skin in the game to ensure there's an initial stock of product so fulfillment starts quickly. Stegmaier points out that asking for large amounts may turn off potential backers because they won't believe enough will be raised. They'll do the math: Amount asked for divided by price equals the number of backers needed. Your pre-launch homework isn't done. You only have one opportunity to make a first impression on potential backers. Hire a pro to design your crowdfunding and web pages, press releases and emails. Ensure that all your marketing has a connective, consistent theme. Prior to launch, send out press releas- es to the blogs to which you follow/subscribe and local news outlets, and emails to your net- work. Just as you hired a pro to design your marketing approach, you may want to hire a PR firm to handle media outlets. Set a realistic deadline for launch day; take into account the time it takes to evaluate comments from those who received samples and those viewing your preview page. Steg- maier points out that, unless there's season- ality involved with your product, there's no right or wrong time to launch a campaign. But launching an incomplete project anytime limits its chance for success. When your cam- paign launches, be prepared to make adjust- ments that incorporate backers' feedback. Check out Stegmaier's blog at kickstart- erlessons.com. n Jim Pawlak is a nationally syndicated book reviewer. Jim Pawlak EXPERTS CORNER Tips for creating a 401(k) plan for your company/nonprofit By John W. Eckel W hen retirement plans first became available, many small and mid-size companies as well as nonprofits had few options. Furthermore, many 401(k) and 403(b) plans had an inherent conflict of interest built into them when financial advi- sors were paid by the fund companies. This incented advisors to recommend plans with the highest com- pensation to the advi- sor rather than lowest cost to the company and employees. That is changing as the result of a recent Department of Labor ruling, requiring finan- cial advisors to act as a fiduciary on 401(k) plans and to place the interest of retirement plan participants before their own. While this ruling does not cover 403(b) plans, many nonprofits could set up a 401(k) plan and transfer existing accounts to the new plan. While you, your company or your non- profit may have made a sound choice when you established your current retirement plan, you owe it to yourself and your employees to make certain it remains the best choice. If you are establishing a new plan, or reviewing an existing one, the following are some items to evaluate: Cost — Consider the total cost associat- ed with the plan — custodial, record keeping, third-party administrators, financial advisor expense and expenses of the investments. Some of these costs you might pay directly while some may be buried within the plan and deducted from participant accounts. You can determine how much is being paid by the participant and what portion is being paid by the company by reviewing Form 408 B2, the summary sent to you each year by the plan provider. A good plan will make fees and costs transparent, and if your plan does not, that's a red flag. Even small differences in cost can have significant differences in account balances, over time, for the employees so cost is critical. Plan administration costs are costs asso- ciated with running the program. Many large companies pay them directly, while some small companies have them billed to client accounts. You may be able to have the company pay those costs yet still reduce the overall costs to the company by instituting a low-cost plan. Investment management fees go to mutual fund management companies for their work. Depending upon your plan, some of these fees are redirected to third-party administra- tors or financial advisors. Look closely at the expense ratio charged by each fund company to identify good low-cost funds. Investment options — A good plan should offer low-cost brand name mutual funds, which include a mix of large cap, small cap, international and bond funds. It should have a mix of actively managed, index and target date funds. User friendly — Employees should have the ability to be automatically enrolled in the plan, make investment selections and access their account on a variety of devices easily. The web site should be easy to navigate and information on funds readily available with balances updated daily. Provide a Roth 401(k) option — Young- er employees will never have to pay taxes on their gains. Employer contribution — An employ- er investment match or safe-harbor con- tribution is a wonderful fringe benefit. While sometimes it may be difficult for smaller employers to afford, this may become affordable if third-party and admin- istration costs are minimized by implement- ing a low-cost plan. Provide individual investment advice — An independent advisor is a valuable ben- efit for employees to consult to help them avoid mistakes. Automatic enrollment — Enrolls new employees while contributing a specified per- centage of their salary to the plan. Employees have the flexibility to "op out" but this feature encourages greater participation. Automatic escalation — This feature automatically increases employee's contribu- tion each year. This helps ensure that employ- ees are saving an amount sufficient for their retirement. A plan containing the above features does not have to be expensive. In fact, every effort should be made to create a plan that is cost effective and transparent for both the employer and employee. Be insistent that your financial advisor make all costs abun- dantly clear. n John W. Eckel is president of Pinnacle Investment Management Inc. of Simsbury. He can be reached at 860.651.1716. John W. Eckel ▶ ▶ Stegmaier points out that asking for large amounts may turn off potential backers because they won't believe enough will be raised.

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