Small and mid-sized manufacturers have traditionally had to self-fund growth or rely on angel investors or venture capitalists to provide funding. On the one hand, this frustrating state of affairs often limits growth and expansion. The other side of the coin is the satisfaction and pride of building your business organically. But now, crowdfunding is changing the established methods in unexpected ways. Here are a few things to consider.

Expansion capabilities

If you have an idea for a new product or a product line expansion, you may not have to max out your credit cards or plead with your banker for the funds to test your idea. Crowdfunding has a built-in way to test the appeal of your product and pitch while raising money at the same time.

Sites such as Indiegogo or Crowdfunder allow you to decide how much you want to raise and the time frame for raising it. You put together your best pitch and offer something of value in return for funding pledges, usually an item from the first batch of product.

The genius of crowdfunding is that you get built in market research. If nobody funds your idea, you know that there isn’t a market for the product or that your pitch needs work. Whichever the case, nobody loses anything, and you may just get the capital you need to fund your expansion without giving up equity or putting debt on your balance sheet.

Unexpected competition

You’re not the only one that has great ideas, and you may discover that a new product that competes with yours comes out of nowhere. You won’t see the idea coming at trade shows or in industry journals, because the manufacturer is probably small enough to fly under the radar. Suddenly, though, there they are with a working product and a bunch of happy customers.

To avoid the unexpected arrival of a category leading product, you may want to identify the crowdfunding sites where competing products are most likely to seek funding. Keep an eye on new postings so you can see what’s about to happen. Although some crowdfunding ideas are off the wall, enough of them have real merit that it’s worth your while to keep an eye on what’s in the pipeline.

New sources of supply

While you’re keeping an eye on crowdfunding sites, you may unearth some new suppliers that can help improve your product. Whether they have a new manufacturing method that can shave costs or replace existing components with more effective ideas, these startups may have a product idea that has synergy with yours. It’s worth the few hours a month it takes to see what new projects are in the works.

Contrary to popular believe, crowdfunding is a viable source of new suppliers, new funds and free market research.