Crowdsourcing: The Future Of Small Businesses?

Apr 11, 2014

Crowdfunding for music and artistic projects has become common practice in recent years, but using an online crowdsourcing platform to fund small businesses has only recently started to gain traction.

Preston Parker stands on the future deck of Morty's Cafe.
Preston Parker stands on the future deck of Morty's Cafe.
Credit Elaine Taylor

Utah State University Professor and Director of the Clark Center for Entrepreneurship Mike Glauser said using crowdsourcing platforms like Kickstarter lets business owners bypass traditional industry mechanisms.

“You’re not giving up an equity in your company, so you don’t have to give the investors part of your company, you don’t have any debt, you don’t owe them any money back, it allows you to simply pre-sell products and services and then people buy them and you go make them,” Glauser said.

Glauser said seven out of 10 businesses fail within 10 years, making crowdsourcing a valuable way potential business owners can test ideas before launching a business.

“I think if people are creative enough to get a project funded, they’re pretty innovative,” Glauser said. “I would guess that those that get funded, the success rate down the road of those companies would be quite high.”

Morty’s, a burger café set to open near the USU campus in August, is described as a locally oriented restaurant by its co-owner Preston Parker. Though a Kickstarter campaign didn’t seem like a good way to fund the three-story building’s construction, Parker said crowdsourcing money for the reclaimed wood interior has been a good way to connect with their technologically savvy target demographic — college students.

“It gives people a focus, a goal, a deadline, something to talk about, so a lot comes out of that,” said Parker. “People will provide feedback, like ‘have you ever thought about a garden burger?' ‘Have you thought about doing this kind of an interior?' And it becomes a location that people want, that they’re excited about. They have buy-in because they’ve contributed to this location.”

Parker said the Morty’s team takes the feedback they receive from campaign donors seriously. So far, the Kickstarter campaign has made 107 percent of its goal, and organizers are hoping to make a few additional goals before their campaign ends Saturday.