What are the risks of not having a backup plan when crowdfunding?

1 Why you need a backup plan

Crowdfunding is not a guarantee of success. It's a risky and competitive process that requires a lot of preparation, communication, and execution. You have to meet your funding goal, manage your budget, produce your product, fulfill your rewards, and satisfy your backers. If you fail to do any of these, you could face legal, financial, or reputational consequences. That's why you need a backup plan: a contingency strategy that helps you cope with unforeseen problems and mitigate their impact on your project and your backers.

2 How to create a backup plan

Before launching your crowdfunding campaign, it is important to create a backup plan that includes a risk assessment, a mitigation plan, a communication plan, and a contingency plan. Your risk assessment should identify any potential risks that could affect your project, such as supply chain issues, technical glitches, regulatory changes, or market shifts. Estimate their likelihood and severity and prioritize them accordingly. Your mitigation plan should define the actions you will take to prevent or reduce the risks. Additionally, your communication plan should outline how you will inform your backers about the risks and your mitigation plan. Be transparent, honest, and respectful when communicating with your backers. Lastly, your contingency plan should specify the options you will pursue if the risks materialize and your mitigation plan fails. Be realistic, fair, and accountable when considering how to compensate your backers for any inconvenience or loss.

3 How to implement a backup plan

A backup plan is not something you put on a shelf and forget. It's something you should monitor and update throughout your crowdfunding campaign. Track your progress by measuring your performance against goals, budget, and timeline. Use data, feedback, and metrics to evaluate your results and adjust your plan accordingly. Additionally, communicate your progress to backers and stakeholders. Utilize different channels, formats, and frequencies to keep them engaged and informed. Acknowledge their support, feedback, and complaints and respond to them promptly and professionally. Finally, if a crisis arises that jeopardizes the project or backers' satisfaction, activate your contingency plan as soon as possible. Communicate the situation, the actions taken, and the outcomes to your backers and stakeholders. Apologize for any inconvenience or disappointment and demonstrate your commitment and responsibility.

4 How to benefit from a backup plan

Having a backup plan is not something to be dreaded, but rather something to be valued. It can help you minimize the negative consequences of risks, such as lawsuits, refunds, or bad reviews. It can also help you enhance your reputation and credibility, strengthen your relationship and trust with your backers and stakeholders, learn or improve your skills in project management, problem-solving, and crisis management, and innovate or optimize your product, service, or process based on the feedback and insights from the risks and contingencies.