COVID-19 Notice: The Asia Import Platform is designed to ensure that you can manage the importing process from anywhere – at a time when it’s impossible to visit suppliers and attend trade shows in Asia.
At a time when banks often refuse to support startups and small business, crowdfunding may become the only option.
Indeed, many Startups don’t even think about going to the bank, but see Kickstarter and Indiegogo as the only viable options to raise funds.
But it’s not only about the money. Crowdfunding sites enable business owners to get instant validation – and I think we all agree that the market itself is far more qualified, as compared to the average banker, to judge a product concept.
I think Crowdfunding is fantastic. It’s the future of business financing.
So, let’s assume that you get enough backers to pledge your project. What’s next?
Most likely, a year of frustration, delays and possibly even failure.
You’ve probably heard the stories of Kickstarter projects failing spectacularly, only within months of raising for beyond their pledging goal. According to a Kickstarter’s own assessment, that fail rate is 9%.
In this article, I will first explain why I think that is the case, and what you can do about.
What can go wrong after raising funds on Kickstarter?
Many of the products presented on Kickstarter are meant to be made in China. Getting products made in anywhere is not an easy task, and China is even harder.
There are two main scenarios:
a. Delays: The project takes much longer than expected, to the point where your backers even forget about you.
b. Costs running away: Without a properly cost calculation, you cannot estimate how much money you must raise to deliver on your promises.
Keep reading, and learn what you can do before, and after, raising money on Kickstarter, to offset the risk of delays and runaway costs.
1. Keep your product as simple as possible
Product development is a complex and time consuming process.
It can take months to find the right manufacturer and sample development can drag on forever.
a. Very specific material and component requirements can make it very hard to find a suitable manufacturer. Try to use materials and components that are in wide usage in the industry today.
b. The more features and design requirements you have, the longer it will take to develop acceptable samples. Try to simplify the product design and functionality as much as possible.
I’ve seen how importers get kind of obsessed with features that have very little impact on the market appeal of the product – even to the point where the buyer forgot why those requirements were put in the spec sheet to begin with.
That way you can hit the market much faster – and fail faster, if that’s what it’ll come down to.
(Ever read the Lean Startup? If not, I strongly suggest you do. It’s written for primarily Entrepreneurs in software, but there are many great lessons for brands and eCommerce companies)
2. Start the supplier sourcing and product development process well before posting your product on Kickstarter
Many Startups greatly underestimate how it can take to take a product from the drawing board to the warehouse.
This holds true, even if you start off with the most basic version of your product.
Some companies don’t move an inch before they have the financial backing from their backers on Kickstarter. This is a huge gamble, as it’s impossible to predict how long it will take to get the product shipped.
It might take 6 months, or 18 months. Or, it might turn out that the product can’t be done at all. I’ve seen that plenty of times too.
By the time you raise money on Kickstarter, you should at least have a prototype ready.
You should also have price data, from more than one supplier. How else can you know if you are raising enough money?
Getting to the point where you have a product sample in your hand can easily take 6 months, or more.
While I understand that half the point with Kickstarter is to validate a new product concept, the risks of starting from zero with the clock ticking, overshadows that aspect.
3. Make a production and quality assurance plan
You got the money, and you have validated your product concept.
Assuming that you already have a sample ready, and a supplier waiting to take your order – you are good to go.
From this point, you will need to achieve the following:
a. Get your products manufactured on time, while still having a backup plan in case of delay.
b. Ensure compliance with all applicable product safety standards and regulations. This may involve both third party laboratory testing and the creation of mandatory documents.
c. Perform quality control on the products, to ensure that the goods are made to specification
d. Get your products shipped and cleared through customs.
If you get caught up with in delays, your entire project may derail. There are a few scenarios that can play out at this stage:
a. It’s common that manufacturers make promises on the production time that they cannot live up to, simply to get your order. Sign a contract that sets clear penalties in case of delay. This can incentivize the supplier to reveal the actual production time.
b. You need to have enough time to order a remake of the products, if too many quality issues are found during the pre-shipment inspection. You should at have at least a buffer time of 30 days.
c. You need consider the time needed for laboratory testing, a process that can take 2-3 weeks. You may also want to collect and submit batch samples before production is completed, in order to save precious time.
Co-founder of Asiaimportal (HK) Limited and based in Hong Kong. He has been quoted in and contributed to Bloomberg, SCMP, Alibaba Insights, Globalsources.com, China Chief Executive, Quartz Magazine and more.
Hey there, I’m Fredrik!
We help eCommerce businesses get quality products manufactured in Asia. Feel free to contact us or use the many free resources on this website.
Don’t hesitate to come by our office for a coffee if you visit Hong Kong
Our Company uses these cookies so that we recognize you on our website and remember your previously selected preferences. These could include what language you prefer and location you are in. A mix of first-party and third-party cookies are used.
Our Company uses these cookies to collect information about how you use a website, like which pages you visited and which links you clicked on. None of this information can be used to identify you. It is all aggregated and, therefore, anonymized. Their sole purpose is to improve website functions.
These cookies are used to monitor the email newsletter's performances
Our Company uses these cookies to collect information about your visit to our website, the content you viewed, the links you followed and information about your browser, device, and your IP address. Our Company sometimes shares some limited aspects of this data with third parties for advertising purposes. We may also share online data collected through cookies with our advertising partners. This means that when you visit another website, you may be shown advertising based on your browsing patterns on our website.
These cookies are used to show targeted ads to the visitors of our website