As a business owner, you’re undoubtedly familiar with the old adage, “it takes money to make money.” It’s a fact that rings true for any new venture. Whether you’re looking to launch a startup, expand your existing service offering or add a second location, it requires an upfront financial investment.

Traditionally, most entrepreneurs have had only a few options for funding their business. They can self-fund their efforts out of their own pocket, raise money from investors or turn to a bank for a small business loan.

But over the past decade, the rapid growth of the internet and social media has paved the way for a new way to raise capital: crowdfunding.

You’ve likely heard stories of successful companies that got their start on popular crowdfunding platforms like Kickstarter or Indiegogo. But is crowdfunding the right fundraising choice for your business? Read on to find out.

What is Crowdfunding?

As its name suggests, crowdfunding involves raising money from a large group of people – called crowdfunders. Unlike a traditional investor, each crowdfunder typically makes a small investment in your business. But when all those contributions are combined, they can add up to a sizable amount of capital.

According to the crowdfunding site Fundly, about $34 billion was raised through crowdfunding platforms globally in 2020. And that number is predicted to triple by 2025!

What Types of Crowdfunding Are Available for Businesses?

While the basic definition of crowdfunding can be applied across the board, crowdfunding platforms differ on how their deals are structured. If you’re considering a crowdfunding campaign for your business, there are four basic types to consider.

1. Debt crowdfunding. This type of crowdfunding functions like a traditional business loan. Your campaign will raise money from individuals, with the expectation that you’ll pay back their investment. Some nonprofit funding platforms, like Kiva, focus on providing interest-free loans for worthy causes. Other debt crowdfunding platforms, also called peer-to-peer lending sites, require you to pay back crowdfunders based on a set repayment schedule and interest rate.
   
2. Equity crowdfunding. If you’re looking for a cash investment that doesn’t need to be repaid, equity crowdfunding may be for you. These types of crowdfunding platforms let individuals invest in your business in exchange for an equity stake in your company. Think of it like a small-scale angel investor or venture capitalist. You set the terms of the deal, and the investment doesn’t need to be paid back like a loan.
   
3. Reward-based crowdfunding. Made popular by companies like Kickstarter, reward-based crowdfunding doesn’t require you to pay back an investment or give up an equity stake. Instead, your crowdfunders will receive some type of benefit in exchange for investing in your campaign. It could be early access to your new product or adding their name to the credits of your new documentary. The rewards and corresponding investment levels are up to you.
   
4. Donor crowdfunding. This type of crowdfunding platform requires you to give nothing in return for a contribution – crowdfunders are simply donating to support your cause. Made popular by platforms like GoFundMe, these types of crowdfunding campaigns typically cater to nonprofits or individuals and businesses facing some type of financial hardship.

What Are the Advantages of Crowdfunding?

• Easy access to capital. Compared to applying for a small business loan or seeking out an individual investor, the barriers to launch a crowdfunding campaign are relatively low. You don’t need a high credit score or an airtight business plan to launch a campaign. You just have to convince others to back your idea.
• Lower interest rates. Depending on the type of crowdfunding platform you choose, you may pay considerably less in interest compared to a traditional bank loan. You could even end up with an investment that doesn’t need to be repaid at all.
• Added publicity. The most successful crowdfunding campaigns are those that generate avid support from their investors. If crowdfunders believe in your cause, they’ll be likely to share your campaign with friends and family – increasing awareness of your business, generating free word-of-mouth promotion and attracting additional investors.
• Low risk. Starting a crowdfunding campaign can be an easy way to gauge the level of support or interest in your new business idea. Because the upfront investment is minimal, there’s no real risk if your campaign flops.

What Are the Disadvantages of Crowdfunding?

• Failed campaigns. Not every crowdfunding effort is successful. In fact, according to The Crowdfunding Center, only 22.4% of crowdfunding campaigns actually reach their investment goals. Depending on the platform you choose, that means you could walk away with nothing.
• Competition. With the growing popularity of crowdfunding campaigns, it’s harder than ever to stand out from the crowd. To launch a successful campaign, you’ll likely need to spend a significant amount of time marketing and promoting your fundraising efforts.
• Fees. While crowdfunding can be a great alternative to more traditional financing options, there’s no such thing as “free money.” Nearly every crowdfunding platform will take a cut of your investment for the use of its services. And you may also have to pay processing fees for donations made using credit cards.
• Tight timelines. Most crowdfunding platforms only give you a limited amount of time to fund your campaign. If you don’t generate enough interest in that time period, you could be left without an investment.

What Should I Know Before Starting a Crowdfunding Campaign?

• Choose the right platform. Because crowdfunding options are so diverse, it can be difficult to give specific advice on the types of projects or initiatives that are a good fit. But regardless of your project, it’s important to pick a platform that aligns with your needs. For example, if you’ve got a great idea for a new business startup, debt or equity crowdfunding platforms may be your best option. Looking to launch a new product? Reward-based crowdfunding can help you earn initial sales along with your upfront investment. Once you narrow down the crowdfunding category, do your research on the platforms that are available. Compare and contrast their services, requirements, reputation and fees. And be sure to check out examples of past success stories. Doing your homework in advance can help increase your chances of crowdfunding success.
• Invest in marketing. To raise an investment through crowdfunding, you’ll need to share your story in an effective and compelling manner. Don’t underestimate the importance of having high quality photos, videos and related content before your campaign launches. If you’re not a marketer at heart, you may want to consider hiring some outside marketing expertise to help you tell your story.
• Protect your intellectual property. If you have an idea for a brand new product or service, promoting it publicly on a crowdfunding platform could allow someone to steal your idea. And if they can bring it to market faster than you, it might take a lengthy (and expensive) legal battle to make things right. If protecting your intellectual property is a concern, it may be worth checking into your options for securing patents, copyrights or trademarks first.
• Use your social network. The success of your crowdfunding campaign will depend, in large part, on your ability to spread the word. Be sure to lean into your personal and professional networks – both in person and on social media platforms. And don’t be afraid to ask your friends and family to share your campaign to help you reach your goals.
• Know the tax implications. Before you launch your crowdfunding campaign, it’s important to understand how any contributions may impact your year-end tax bill. As far as the IRS is concerned, the money you earn from crowdfunding will generally be taxed as income during the year you receive it. This is especially true if crowdfunders have received anything in return for their contribution. Of course, the tax implications for your exact situation may vary – so it’s best to get counsel from an attorney, accountant or tax professional.

7 Things Business Owners Can Spring Clean Without Picking Up a Mop

Each year, 78% of Americans tackle spring cleaning in their homes. If you’re one of them, chances are you enjoy rolling up your sleeves and using a little elbow grease to freshen up your abode. Not only can the results of this annual ritual leave you feeling less stressed, more at peace and more focused, but it can also give you a big sense of accomplishment.

Did you know that you can do the same thing for your small business – without the mop, bucket and rubber gloves?

Here are seven things you can do as a small business owner to refresh your workplace this spring (or any time of year) without breaking too much of a sweat.

1. Your marketing plan. When was the last time you took a hard look at how you’re promoting your business – and the products or services that you offer? It’s important to evaluate what’s working, what isn’t and ask yourself what else you could be doing. Maybe you’re ready to do more on social media to grow your business or it’s time to update your website. Perhaps you’re interested in revising your customer service strategy, running promotions throughout the year or establishing a customer loyalty program. Gather your ideas, make a plan (or update an existing one) and turn those ideas into action.

2. Your inbox. If the number of messages in your inbox includes a comma, make it your mission to bring that figure down and get organized. While it may feel overwhelming to start, Fast Company offers a roadmap that can help you clean out your inbox in about an hour:

• Take 10 minutes to clear out the junk. This includes social media notifications, delivery confirmations (for packages you’ve already received), already-perused newsletters and more. Do this en masse if you can.
• Take 20 minutes to create folders and labels. After you purge the junk, you need to organize the messages that you’ve already read – and don’t need to do anything about – but that you want or need to keep. Go with a folder naming system that makes sense to you – and know that you can update this down the road to customize it even more to suit your preferences.
• Take 20 minutes to address those emails that need action. After getting rid of the junk and saving the emails you may need to reference later, it’s time to move on to the messages that you need to act on. Try to follow the two-minute rule: if you can complete the action needed for the email in less than two minutes, go ahead and do it. If you can’t, add it to your to-do list to take care of it later.
• Take 10 minutes to update your settings. Consider creating filters that will sort your incoming messages for you.

3. Equipment. Are you saving an old printer because you “might” need it one day? Is there an old broom in the corner clinging to life thanks to a little bit of hope and a whole lot of duct tape? Do you have a drawer of unused – or barely used – USB drives? How many old computer monitors or hard drives are shoved into your storage closet? Clear out any unused, outdated or broken pieces of equipment. If you’re getting rid of items that could potentially contain sensitive information (like said USB drives or hard drives), just make sure that everything is scrubbed and cleared before you purge.

4. Digital files and paperwork. Maybe it’s a pile of manila folders sitting in the corner of your office, the filing cabinet you haven’t touched in months or documents on a shared drive in your cloud-based storage platform. Make a commitment to go through all your stacks, folders, cabinets and more. But before you purge, make sure you know which records you are required by law to keep – and for how long.

   When you determine which items you can get rid of, make sure you dispose of them properly – especially anything that contains personal information. For any paper documents, the Federal Trade Commission recommends that you either shred, burn or pulverize them. (But don’t get rid of papers that can help you track your small business expenses too quickly!)

5. Data security protocols. When was the last time you backed up your data? Do you have established best practices for passwords? As a business owner in an increasingly digital world, you maintain a delicate balance of staying on top of ever-changing tech trends and keeping important business data safe. And it’s more than guarding against user error or equipment failure. It’s also about reducing your risk of data breaches that can occur when personal information like customers’ credit card numbers or employee tax information is compromised. Read 6 Things You Can Do Right Now to Protect Your Business Data to put the right practices in place to keep your business information safe.

6. Your business plan. According to the Small Business Administration (SBA), your business plan should be the foundation of your business and guide you through structuring, operating and growing your organization. But how often do you review it? Quarterly? Annually? Why not make spring the time you examine this “roadmap” and determine what comes next. Maybe you’re considering things like opening a new location or adapting to changing customer expectations resulting from the pandemic. They all should be part of your plan. If you don’t have one, now is as good of a time as any to create one. The SBA has templates you can use to craft your own.

7. Your business insurance. If you don’t have adequate protection from a business insurance policy, an accident of any kind could be detrimental to the health and well-being of the business you’ve worked so hard to build. So schedule a meeting with your insurance agent to review your policy. Together, you can make sure you have the proper coverage that fits your company’s needs and covers any risks associated with your operations. Find out more about Why You Shouldn’t Cut Corners on Business Insurance.

How to Tackle Your Small-Business Spring Cleaning Projects with Confidence

If you want to take on these projects (or more) but feel overwhelmed, we get it. As a small business owner, the idea of adding several more tasks onto an already overloaded to-do list may seem daunting. But there’s help! Psychology Today offers 10 tips you can follow to tackle your next big project.

1. Make a plan. Set your goals, get organized and be extremely specific about how, when and where you will complete your project.

2. Commit. You set your goal in your plan. Let others know what you’re trying to achieve, as well. Having some accountability can be a powerful driving force in your work.

3. Split it up. Divide your large plan into smaller chunks. This can make it feel less overwhelming and give you the time to complete each task the right way. Plus, achieving small goals can help keep you motivated.

4. Make it a habit. Schedule your project tasks in advance so that they become part of your daily – or weekly – routine.

5. Start off in your head. By imagining the work you’re going to do via a process called mental simulation, you can get over the procrastination hump and prepare for what lies ahead.

6. Make it easy. Rather than finishing one leg of your project because you have to tackle a more challenging task next, try to set yourself up for success by starting your next work session with an easy task. That way, you can ease yourself back into your work – then move on the harder work.

7. Stay positive. Staying upbeat can help you be even more productive, which brings you closer and closer to reaching your goals. So celebrate all your wins, even the small ones.

8. Reward yourself. A reward for reaching a project milestone can be a great means of positive reinforcement. Bonus points if you can tie your reward back to your work.

9. Let others know how you’re doing. Sharing your progress with others can keep you on track to reaching your project goals.

10. Give yourself a break if you need it. If you’re feeling stuck, find another unrelated task to do. Switch gears to another project. Take a short walk. It can be re-energizing and even provide some inspiration for when you do come back to it.

Gone are the days when phishing attempts were easy to identify and limited to only emails. While malicious messages are nothing new, they’re becoming more sophisticated and harder to pick out from legitimate business communications.  They are also coming at us through texts, social media chats and even phone calls.

A few simple actions with one of these messages can develop into a problem that spreads quickly across digital channels and devices, but there are things that you can do to defend against phishing attacks and resources that can help.

Vice President, Corporate Information Security Officer Jamie Neumaier knows a lot about tackling security threats. Jamie manages an information security team that works to ensure the people and systems at Erie Insurance stay as safe as possible. He answered questions about phishing scams targeting businesses and offered some useful security tips.

What is Phishing?

Phishing is malicious activity in which criminals try to gain access to user’s information, data, or devices. The goal is to get you to act without taking a moment to think, and when you do, the phishers may:

• Gain access to data and information, which they can exploit.
• Install malware on your system.
• Prompt you to reveal your personal financial information for purposes of stealing money or your identity.
• Access your email and send other malicious messages to your contacts, to exploit others.

Are Businesses Especially Vulnerable to Phishing Scams?

Yes. With more work being conducted digitally, businesses of all sizes are susceptible to attacks. Attackers also assume that small businesses do not spend a lot of money or effort on their security measures making them a potentially easier target.

Phishers can easily find your contact information online and be reasonably confident that any message they send you will be at the very least opened because you’re in a business of being responsive. The phishing messages have also grown in sophistication, so it’s easy to be convinced to visit a malicious website or download an infected file that comes in a message that looks legitimate.  If they happen to be the type of phisher to give you a call, they can be very convincing in having you follow their detailed instructions in providing them your valuable information or installing their malware.

How do You Spot a Phishing Attack?

Phishing messages that are poorly written, offer you large amounts of money or ask you for financial assistance have been common for a long time. Most of us know not to open, click or respond to these messages. As mentioned above, phishing attempts aren’t limited to emails either. Hackers now use phone numbers like your mobile number to call you and attempt to have you reveal sensitive information. They may send you text messages as well.

More recently, phishing messages are being designed to look like other emails that you might receive. They may appear to be from someone you trust like a bank, friend, software provider, retailer or vendor, but usually, the timing of the messages is unexpected.

For instance, one common technique is for a hacker to gain access to an email account through a phishing attempt, then access the account and reply to a real email conversation with a malicious link. So, when the recipient receives this email, it looks like a continuation of an earlier conversation, but it asks the recipient to download a document or enter their credentials.

How Can Phishing Attacks be Prevented?

In the course of day-to-day business between you, your employees, customers, and other consumers in general, know what you’re working on. If you receive a message, phone call or email that is unexpected or seems even just a little bit off, verify the validity of the message before taking action. Call the person who appears to have the message and ask if he or she sent it. If the answer is no, it’s a malicious message.

In early 2020, the COVID-19 pandemic led to the widespread closure of offices and workplaces across the world. Many employees learned something during this unprecedented time – that it was possible for their work to be done remotely from home.

Of course, telework is not an option for every job or every company. According to a recent study conducted by the Pew Research Center, 62% of workers with at least a bachelor’s degree education say their work can be fully done from home, yet only 20% worked from home before the pandemic.

During the pandemic, though, employers took advantage of work-from-home options to keep productivity up. Six months into the pandemic 71% were still working from home.

After months of enjoying the benefits of remote work – such as a more flexible schedule, better work-life balance and less time spent commuting – the Pew survey found 54% didn’t want to return to the office full time.

Is Full-Time Remote the Answer?

While some employees still desire fully remote options, working from home isn’t always a perfect solution. As we’ve learned, video conferencing and instant messaging isn’t a substitution for real face-to-face interaction. Some tasks can be difficult to complete remotely. And the same study found 57% of employees who work from home all or most of the time say they feel less connected to their coworkers.

To balance these concerns and maintain a positive workplace culture, many employers are adopting a new hybrid work model – one that combines working from home and the office. Below, we’ll explain the benefits of hybrid work, as well as some potential risks you may want to consider as a business owner.

What is a Hybrid Work Model?

A hybrid work model is one where employees split their time between working from home and working onsite at a company-owned location. How an employee’s schedule is structured will vary from business to business. Some companies opt for a set schedule of remote work and in-office days. Others may let the employee work from home at their discretion, giving them the freedom and flexibility to set their own schedule.

What are the Benefits of Hybrid Work?

As a business owner, the hybrid work model has its share of benefits:

• More productivity. For a long time, managers have struggled with the idea of employees working from home because they assumed productivity would suffer. But multiple studies have found the opposite to be true. Free from the distractions of a traditional work environment, and given the flexibility to work how and when they want, remote employees are often found to be more productive at home.
• Lower costs. In a hybrid work model, you no longer need a dedicated workspace for every employee. Instead, you can have flexible desk spaces that anyone can use when they’re in the office. In the long term, this means you’ll need less space (think lower rent or lease payments). Plus, there’s the money you’ll save on things like office furniture, utility bills and office supplies.
• Higher employee satisfaction. With more and more of the workforce wanting to work remotely, a hybrid work model can help you attract and retain employees. And since employees will still come to work at least part of the time, you may also reduce the feelings of loneliness and isolation that sometimes accompany full-time remote work.

What are the Insurance Risks of a Hybrid Work Model?

In many ways, moving to a hybrid work model may seem like the best of both worlds for some business owners. But when it comes to your business insurance, it may open you up to twice the risk, too. Here are some potential insurance risks for the hybrid workplace.

• Workplace injuries: You probably take steps to reduce the risk of workplace injuries at your physical office or facility. Whether that’s ensuring walkways are clear, or setting up your workstations to be ergonomically friendly, most employers do their best to keep everyone safe. But when your employees are working from home, their work environment is no longer in your control.

  To reduce this risk, talk to your employees about the importance of work-from-home ergonomics, and encourage them to work from a dedicated space – not the couch or kitchen table.

• Cyber security: Each year, the number of data breaches are on the rise. As an employer, you take steps to protect your network within the walls of your physical office. But what happens when your employees access sensitive data from a home or public network? If they’re not careful, it could leave you vulnerable to a cyber attack.

  To help prevent hackers from accessing your data, talk to your employees about the importance of cyber security. Require an encrypted connection when remotely accessing any sensitive files, and make sure your staff keeps their software and operating systems up to date.

  Want actionable items you can check off the list now? Read 6 Quick Tips to Protect Your Business Data.

• Property damage: If your employees are taking company equipment back-and-forth between work and home, you should make sure that equipment is covered – under your business insurance or the employee’s homeowners policy. While many insurers are adapting their policies based on the growing popularity of remote work, every policy is different. And if your assets aren’t covered, you could find yourself out of luck in the event of an accident.

What Insurance Coverages Should I Consider for a Hybrid Work Model?

If you’re thinking of adapting your business model to accommodate hybrid workers, it’s a great time to check in with your local Erie Insurance agent. Your agent can give you specific advice on the risks and coverages unique to your business. But here are some coverages you’ll want to ask about.

• Business insurance: If employees will be working from home, ask your agent if your business insurance policy will cover property damage at a home office. If your current policy doesn’t include this coverage, it may be available for purchase.
• Workers’ compensation: Did you know that if an employee hurts themselves while working at home, your workers’ compensation could kick in? “Each state has its own laws, but if an injury happens during the course and scope of their work, it could easily be a workers’ comp claim,” explains Al Medofer, ERIE’s director of risk control. Your agent can help you understand the ins and outs of your coverage, and ensure you’re protected no matter what.Read this article for more information on what to know about workers’ compensation and working from home.
• Data breach coverage. All businesses are vulnerable to cyber attacks and data breaches. Enter ERIE’s Cyber Suite¹, which offers both first- and third-party coverages for things like data breach response expenses, cyber extortion and privacy incident liability.
• Business umbrella insurance: No matter how careful you or your employees are, mistakes and accidents unfortunately do happen. That’s why many business owners make the smart decision to protect themselves with extra business liability insurance. Known as Business Umbrella Liability, this additional layer of coverage gives you extra protection and peace of mind above and beyond your commercial general liability, professional liability, business auto liability and employers liability insurance.