How Small and Medium-Size Businesses Can Benefit From Crowdsourcing

Have you ever encountered a challenge or a problem in the workplace that neither you nor your colleagues could wrap your heads around? What do you do in such a case – employ more capable hands or maybe bring in a third-party company to help sort out the issue? If there was an inexpensive method […]
How Small and Medium-Size Businesses Can Benefit From Crowdsourcing

Aug 27, 2020

Have you ever encountered a challenge or a problem in the workplace that neither you nor your colleagues could wrap your heads around? What do you do in such a case – employ more capable hands or maybe bring in a third-party company to help sort out the issue? If there was an inexpensive method used by innovative companies to tackle such issues, wouldn’t you be willing to try it out? That’s where crowdsourcing comes in.

Why Is Crowdsourcing Important?

With over 4.33 billion of the world’s population using the internet daily in 2020 (many of whom are experts in their respective fields), crowdsourcing seems like a great option for small businesses looking to maximize their already limited resources without meddling with the expected outcome or results.

Notable brands like Google and Automattic Inc. have successfully utilized crowdsourcing to develop their multimillion-dollar services Google Chrome and WordPress.

For example, Google uses its crowdsourcing platform to collect suggestions from millions of users of its products and services worldwide. The collected answers and suggestions are then shown to a team of experts and other crowdsource users for validation. Once validated and given the go-ahead, a new feature is then implemented into the product or services needed for improved performance.

Benefits of Crowdsourcing for Small and Medium Businesses

How Small and Medium-Size Businesses Can Benefit From Crowdsourcing

Image Source: Startup Nation

  • A Source of Ideas Outside an Organization

Imagine trying to start a company, but you have no idea what your company name should be or represent, or what your company logo should look like. In the past, you had to solve this problem alone or decide to outsource such a task to a freelancer or agency. However, the downside of outsourcing is that it limits your options, and prevents you from finding other (possibly better) solutions.

Why rely on just one expert when you can have access to hundreds and thousands of other expert opinions and ideas through crowdsourcing platforms for almost the same or lesser price? Startups and small businesses operating on a tight budget can use crowdsourcing to seek new ideas or reshape existing ones. This can be achieved by reaching out to crowdsourcing communities such as, Upwork and Crowdspring, where you can outsource specific jobs to a crowd of enthusiasts interested in working for your business on a project basis.

  • Increased Flexibility

Crowdsourcing is a very flexible process that allows smaller businesses that are just starting out to pay only for what they need. That way, they can avoid unnecessary expenses attached to hiring full-time workers for temporary job positions.

For example, small and medium-sized businesses with a tight budget that may need graphic design services once every six months to promote a marketing campaign or two can’t afford to hire a permanent graphic designer who gets paid all year round. That’s why crowdsourcing can help with finding new design ideas anytime there’s a need for a cost-effective campaign.

All you need to do is visit any crowdsourcing platform for graphic design, post a request, and specify details. Designers interested in your project will work on your request using the details you have provided and submit their designs.

The fun part of crowdsourcing is that you only have to pay for that one design you choose. If the designs submitted don’t match your expectations, you can always post another request, without paying a dime for the previous ones already submitted.

Established companies can also draw resources from crowdsourcing when heading into new business endeavors with uncertain results. That way, it’s easier to cut losses and move on if the plan fails. However, if this new business endeavor eventually becomes a success, crowdsourcing will also allow such organizations to scale according to demand until there’s room for permanent job positions.

  • Reduced Time for Marketing New Products

Through crowdsourcing, businesses can quickly gain insights into which features are essential for new products that will directly satisfy customers’ needs according to current market demands. Before launching a new product, a prototype is sent to crowdsourcing platforms for testing to get feedback, inputs, suggestions, and expert opinions from people interested in the project. Every input can then be validated by in-house experts or other anonymous crowdsourcers, or both.

A new feature that successfully goes through all the validation stages is then added to the product that now has more chances of beating the competition. That way, new and improved products that meet the current market standards are developed faster and more efficiently.

Therefore, it’s clear that crowdsourcing reduces the time that would otherwise be wasted on trying to get feedback from customers by testing prototypes in the mainstream market before launch.

  • Raising Investment Capital Through Crowdfunding

Crowdfunding is a subset of crowdsourcing. It entails the process of raising capital for a product or project launch through voluntary donations with the promise of a reward after a successful launch. Crowdfunding comes in various formats, and they all entail different terms, conditions, and rewards. Here is a brief look at each model.

Donations-Based Crowdfunding

Charity organizations often utilize this form of crowdfunding. Here, donors willingly give money for a cause, project, or product launch, without expecting any reward in return. An example of a donations-based crowdfunding platform is GoFundMe.

Loan-Based Crowdfunding

This is a form of crowdfunding that allows businesses and individuals to seek out loans from donors through crowdfunding platforms with the promise of paying back with interest within a specific time. Loan-based crowdfunding provides an alternative to bank loans and other financial services loans whose interest rates could be outrageous in some cases. An excellent example of a loan-based crowdfunding platform is Kiva.

Investment/Equity-Based Crowdfunding

Here, individuals become part owners of a project or business. With equity-based crowdfunding, they are given a portion of the company in a form of shares, depending on investment capital. Republic is an excellent example of a U.S. investment-based crowdfunding platform. Seedrs is one that operates in the UK.

Reward-Based Crowdfunding

Reward-based crowdfunding allows individuals to invest in a project or product in exchange for a specific reward or benefit. One of the best known examples of a reward-based crowdfunding platform is Kickstarter.

Startups with little or no capital can utilize crowdsourcing to raise capital for their product or services without borrowing or pitching their ideas to banks and other financial service providers. They can also check demand for a new product, and need only go ahead with a production run if they know they have enough pre-orders to hit a pre-set sales target. This is known as the “All or Nothing” model.

Alternatively, for pre-existing stock, crowdfunding can be used as a quasi-sales channel.

  • Building Customer Loyalty

Consumers want personalization; they want to feel like they are a crucial part of their favorite brand. Moreover, they want their opinions or feedback to matter and be taken into account in the decision-making process.

Image Source: Startup NationA current example is the music band Snow Patrol who involved their fans in the song writing and recording of a five track EP (Extended Player) named “The Fireside Sessions.” All sales proceeds are going to an anti-poverty charity, and the fans who contributed ideas or suggestions are mentioned in the CD artwork and digital booklet.

Snow Patrol has also been known to crowdsource among the band’s fans to create song-lists they will play at gigs.

Crowdsourcing is a highly engaging process between businesses and their customers where ideas, suggestions, and criticism are appreciated. This sort of engagement inadvertently results in increased customer loyalty.


Crowdsourcing provides a goldmine of opportunities for small businesses. It’s a great way to harness new ideas from a wide pool of expertise that can be used to improve your business performance.

About Author

About Author

Andriana Moskovska

Besides being a regular contributor to several tech and digital marketing blogs, Andriana is proud to call herself SmallBizGenius’s community manager. Her mission is simple: to connect small business owners with the best tools and resources to help them thrive. When she’s not working, Andriana likes to go for walks with her two pet dachshunds and binge-watch documentaries, usually not at the same time.

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