Crowdfunding For service Businesses with Lena West

Susan Boles:
00:00

Want some funding for your business but kind of hate the idea of giving away a piece of your company to someone else? Yeah. Me too. I mean, you built this baby with your bare hands. You worked early mornings, weekends, around, or maybe even at your kids' soccer games.

Susan Boles:
00:17

And the idea of just handing part of that over to someone who has no sweat in the game might make you feel a little bit furious. So, don't. There are other options, and we're gonna talk about them. I'm your host, Susan Boles, and this is Beyond Margins, the show where today we're geeking out about crowdfunding. Right now on the show, we're in the middle of a series talking about all the different options for getting outside funding for your service business.

Susan Boles:
00:50

In the last episode, we covered taking equity investments in your business. It's a great option for folks where it's a good fit, but it's not the only option and, quite honestly, probably not even your best option. I'm talking to Lena West who is the founding director of CEO Rising, the first of its kind incubatoraccelerator hybrid dedicated to providing service based businesses with the 3 growth tools that they need most, coaching, community, and cash, so they can build ethical, profitable, and sustainable businesses. And we're talking about non dilutive funding, which is just a fancy way of saying funding where you don't give away any equity or ownership in your business. We're specifically doing a deep dive on crowdfunding today, but we get pretty spicy about traditional equity funding and why you might not want to choose that as an option.

Susan Boles:
01:43

So, if you listened to the last episode on taking equity funding, here is the flip side of that coin. Lena has walked multiple clients through the crowdfunding process, and we geek out about the ins, outs, and how to's of creating a great crowdfunding campaign and the things to think about and to watch out for while you're doing it. If you're an agency or consulting firm owner, you might be sitting there thinking that this isn't an option for you or it's not accessible, but you might be surprised how applicable it might be. I know I was. Okay.

Susan Boles:
02:25

So you have helped several clients through the process of using crowdfunding as a means to get capital in their business, and I think this is an option that most folks probably think isn't necessarily accessible to them. So can you kind of just give me a general overview of why someone with a service business might think about going this route versus another direction or just that they should consider this as an option?

Lena West:
02:55

Susan, that is a loaded question. First of all, thank you for so much for having me on. That is a loaded question because I am passionate about this topic. Because I really feel like diluted funding has had its heyday. It got us here.

Lena West:
03:12

We're grateful. And by diluted funding, I mean, like, VC funding, angel funding, etcetera. Right? I feel like it's had its heyday. It got us where where we are here today.

Lena West:
03:25

I do not think that it is ethical for me to say, hey, Susan. Here's some money. And, oh, by the way, give me half of your company or give me 30% of the company that you have been working the past 10 years or however many years to build. Right? And I I I also believe that in it is this kernel of homestead holdout, if you will.

Lena West:
03:51

This kernel of, hey, UVC companies. Hey, you angel companies that wanna fund me. You've told me for years that my service based business not only wasn't scalable, but also wasn't investment worthy. And now that you see that it is, now you wanna give me money? Yeah.

Lena West:
04:12

No. Thanks. Keep that same energy. Right? Keep that same energy.

Lena West:
04:16

And what I'm gonna do is I'm gonna build the funding over here in a way that works for me. And what I love about crowdsourcing is it gives you options to reward and pay back your funders in a way that's meaningful to them, whether that's return of funds or whether that's something else. So if you're crowdfunding a film, for example, there's credits, there's all sorts of, you know, other, options that you can how you can pay back. But I feel like this crowdsourcing and non dilutive funding options are ways for service based businesses to say, yeah. You don't get to offer me fiat currency and take 30% of my vision.

Susan Boles:
05:03

I love that. I think you are

Lena West:
05:06

I'm a bit of a rebel.

Susan Boles:
05:08

No. I think it's really, it's a unique perspective, but one that we really need to listen to. Particularly for service based business owners, our heart and souls are going into building these businesses. Frequently, they start out as us just selling essentially our time or ourselves or our brand to clients and then thinking about handing that off to somebody who had no, you know, no currency in building it. They didn't invest anything except their, you know, fat cats who have a bunch of money to throw around feels deeply unfair.

Lena West:
05:53

It's reductive is what it is. Yep. It says my money that I have oodles of that I'm sitting on piles of outweighs your blood, sweat, and tears for the past 10 years or the past however many years, outweighs the sacrifices that you've made in your life and with your family, not being there, missing games if you've got children, missing events with your partner, missing travel with your partner, whatever. Right? It's reductive.

Lena West:
06:21

And to me, it's transactional. And listen, I get that there are some players in the space that are trying to make funding available for all. I get that. And I'm not saying that that's a bad thing. I'm saying the time for that is kind of over, and we need to be exploring other options because other options are there.

Lena West:
06:43

And, I mean, I worked on one Kickstarter campaign. I can't say the name, but the goal was around a 100,000, and they were able to raise 5 times that. And all without having to promise more of the company for 5 times the money. You understand?

Susan Boles:
07:02

Right.

Lena West:
07:02

Right? So if you go back and you look at that from a VC angel perspective, like a traditional funding perspective, if you give me 5 times the money, well, then the cap table changes. In this instance, there's no cap table change.

Susan Boles:
07:18

Well and that also taking things like VC money kind of misaligns the incentives. If you are someone who is growing your company with a specific set of values For a lot of my folks, the people that listen, a lot of that is calm. We're trying to build calmer companies that is inherently misaligned with the expectations of taking something like VC funding where it forces you to have to focus and prioritize exponential growth, and that might not be the best or most sustainable thing for your company. Whereas crowdsourcing, crowdfunding allows you to offer the incentives that feel genuinely aligned to both your audience and to you as a founder.

Lena West:
08:10

Yes. Typically, people who will invest in crowdsourcing, and they will give through the crowdsourced funding, they know that it's an iterative process. And so there's more leniency. There's more understanding. There's more grace of, hey.

Lena West:
08:26

We didn't meet this window because x y z happened, and so this is our next thing. And it's not like you're being grilled over hot coals to produce. So I was on the board of a company that received traditional funding. It was prerevenue, very well known VC company. They, gave this company funding knowing they were pre revenue and knowing they were pre product market fit.

Lena West:
08:59

The moment they gave them the money, it turned into show us your receipts for the past month.

Susan Boles:
09:08

Wow.

Lena West:
09:09

In other words, it wasn't like 6 months had passed and said, okay, Now show us what kind of revenue you're generating. It was literally the next meeting of the board was show us your revenues that you've collected for this service. And they gave them the money knowing that they were prerevenue and knowing that they were pre product market fit. And what I mean to tell you, that this woman was harangued by the VC company that gave her the money for weekly reports, for monthly updates, for expected monthly revenue streams to the point where she and her husband almost got divorced. Now the other kicker of this is remember I I mentioned a moment ago, when you're working with crowdsource funds, people tend to be more lenient.

Lena West:
10:01

They're they understand it's an iterative process. Okay. The company that gave this person the funding, this company the funding, they, how should I say, pride themselves on saying that they understand the small business and that they understand the, quote, unquote, working woman. I'm just gonna leave it there.

Susan Boles:
10:26

Sorry. That makes me.

Lena West:
10:29

Exactly. Like I said, I'm gonna be kind. I'm not even gonna un I'm not even gonna get into that. Right? I'm not even gonna get into that.

Lena West:
10:37

The working woman. Okay? And when this person told her funders that she was having some, childcare issues and some challenges, she was summarily told that sounds like it's a personal problem, and that doesn't have any place at this board meeting.

Susan Boles:
10:59

I hate every bit of that. Every part of that.

Lena West:
11:03

Bit of it is toxic garbage dumpster fire on trash. Like, it's just bad. And listen, you can dress it up however you like as you know, but we make sure, you know, 80% of our funding goes to, you know, women of color or LGBTQIA listen. That's all great. I am all for that.

Lena West:
11:25

I want my folks to get more money. I truly do. Okay. But if you're also doing it in the same way that it's been done, doesn't make it less predatory. In fact, it makes it more predatory.

Susan Boles:
11:40

It is so frustrating that on the surface, the diversity initiatives of some of these funds, right, they have realized that funding cishet white finance bros from the tech industry maybe isn't their best bet, and that, you know, companies led by women frequently actually perform better. It just makes me really mad that even though they've made this realization, they are not building that into any of their funding process. They're not taking into account any of the realities of being a, quote, unquote, working woman, that you've just taken the good old boy bro system and slapped a, you know, a sticker on the front of it that says now now here for diversity.

Lena West:
12:39

It's shrinking and pink it all over again. And also, see, I'm a little bit of a harder nose on this. And the hard nose that I have on this is this. A moment ago, funding TransFounders wasn't your thing. But now that it's cool, you get to come and talk about how you're funding TransFounders, and you expect us now to be grateful.

Lena West:
13:05

I feel like it's, it's giving performance. It's giving opportunistic. Yeah. It's giving, we we go wherever the money is. We go wherever we think we can, not even make the most impact, but get the most pats on the back for doing what we needed to have been doing in the first place.

Susan Boles:
13:28

Yeah. For sure.

Lena West:
13:29

The fact that the trans community is investment worthy now means it was investment worthy then.

Susan Boles:
13:36

Yeah. That it always has been.

Lena West:
13:38

Always has been. So let's stop playing these games. And I would have so much more respect for VC funds and angel funds if they would just say we were shortsighted. We probably missed out on some really good companies that we could fund. But no.

Lena West:
13:59

Like, I forget who it was right now and I wanna give attribution. Please charge it to my head and not to my heart. The woman who went for funding and she said, they told her, hey they literally said the words to her. Hey, your company is great, but we already funded a black business this year.

Susan Boles:
14:20

What? Yeah. Okay. Tamping down my rage. Just pushing The rage.

Susan Boles:
14:30

Pushing the

Lena West:
14:30

rage. The rage. And and so now do you see why I'm always on this soapbox? Because I'm like, there's so much. There's so much.

Susan Boles:
14:40

So this is a little off topic, but I am interested in your perspective of some of the new newer funding companies, things like Arlan Hamilton's Backstage Capital. Do you feel like they are different, or they're just a different brand of the same structures, same incentives.

Lena West:
15:07

Now let me just say this. I don't know anything about Arlen's deal or deal structure at all. I really don't. I have no knowledge of that whatsoever. What I will say is if anything looks like a duck and quacks like a duck, then it's a duck.

Lena West:
15:25

If the deal structure isn't a departure from the traditional structure, then it's traditional structure. It's, you know, it's the slapped on. Again, I will say, I don't know anything about Arlen's deal structure at all. I'd I've never spoken to Arlen. I was a member of their, group extremely briefly, for a little short period of time, but that I I still don't know anything about their deal structure.

Lena West:
15:53

But I will say anything that is similar in structure to traditional VC deals and angel deals, anything that's similar, even though it might be inclusive and even intersectionally so, to me to me does more harm than giving the money to the tech bros.

Susan Boles:
16:15

Okay. Say a little bit more about that because now you have me intrigued.

Lena West:
16:21

If you are applying that that same old model, that extracted model, but now you're applying it to traditionally and historically marginalized people, you're doing more harm than if you apply that model to a white cishet bro.

Susan Boles:
16:36

And do you think there are any circumstances or types of business where you should be looking at VC funding and angel capital at dilutive structures? Or are you you think in all cases, it's something that for the most part, if you can't avoid, you should?

Lena West:
16:59

I think the latter. If you can avoid it, you you should. And every single person I know who has come out of the other side of a successful or unsuccessful fundraise has said the exact same thing. Now I'm just one person but I've been doing this work for 17 years. I've seen a few things.

Lena West:
17:19

And I've talked to a bunch of people who have gone through traditional funding. And like I said, not all of them are nightmare stories about, you know, abusive, that's an that that kind of a thing in boards in board seats and board takeovers. Not every one ends like that. Some of them, even the ones that end successfully and they have a successful, you know, they whether they IPO or not, that's, you know, that's that's a different story. But the funding goes smoothly.

Lena West:
17:49

No issues. They still say, if I could have avoided that, I would.

Susan Boles:
17:54

It makes sense to me.

Lena West:
17:57

I think the the circumstances under which a company needs to be seeking VC or angel funding, so dilutive funding, extractive funding is extremely narrow, and most companies don't meet that criteria.

Susan Boles:
18:13

And, I mean, it is inherently I think extractive is the best way to put it is that the point of the investors, the reason they are investing is to extract the value from whatever this company has either produced or their IP or their ideas or their business model. The point of investing is to be able to extract the value from that investment and take it and leave. There the incentives are inherently not aligned to build something more sustainable or to build something even long term that has longevity. It is to get in, get the value, and get out.

Lena West:
19:00

And I think what a lot of founders don't understand is that that's what you give up. You give up the autonomy. You give up the vision. You give up the ability to even execute towards your vision if they deem that this company isn't growing fast enough. Like you said, exponentially.

Lena West:
19:20

It's not doing what we thought it was gonna do, so this is what we need to do. We need to shift gears, and you've gotta follow suit because, hello, that's part of your deal stack.

Susan Boles:
19:29

That's part of what we agreed to when we created this this, deal. Okay. So let's let's shift a little bit from, the reasons you wouldn't want to take investment and shift a little bit more towards what crowdsourcing could potentially look like. Somebody has bought in on, I don't want to dilute my funding, but I do need external sources of funds. Right.

Susan Boles:
19:59

Let's shift towards thinking about what types of crowdsourcing or crowdfunding are actually an option and what that might look like for somebody who is potentially considering going this

Lena West:
20:14

route? There's all sorts of platforms where you can I mean, Kickstarter, we all know about that? But there's also, vertical specific crowdfunding, options out there. There's one again, my brain is playing the trick on me. That's for CPG brands, that's specific to CPG brands, like beauty brands and such.

Lena West:
20:34

So I would say the first thing that you wanna do is give yourself more time than you think you need because there's a process here. Right? On the surface, it's not as linear as the traditional funding process only because we haven't had the level of experience that we've had with crowdsourcing, volume experience with, crowdfunding as we have had with VC. So, like, you know, you go, you do your pitch deck, and you're like, we all know that that's the story with traditional funding. What I love about crowdsourced funding is it allows you to be way more creative, not just in what you pay back and rewards, but also in how you present what you have to offer.

Lena West:
21:25

So I really believe in multimedia using commercials, using videos, and that stuff to be done well and to get buy in takes time. That's the first thing. If you know you want funding, don't don't box yourself in. Don't box yourself into oh I'm gonna launch this crowdfunding campaign in 30 days wrong wrong Don't do it to yourself. Right?

Lena West:
21:53

Give yourself the time you need to develop the marketing assets that you need. Work with someone who works in branding. Work with someone who writes copy for crowdfunding campaigns. Like, there are literally copywriters. All they do is crowdfunding campaigns.

Lena West:
22:14

There are literally videographers who only produce video for crowdfunding campaigns. That is all they do. Seek those professionals out and work with them because it makes a difference.

Susan Boles:
22:28

Yeah. Totally. I mean, essentially, this is a big marketing project. That's the whole thing is just you taking on the marketing end.

Lena West:
22:35

It's a huge marketing project. And in some instances, it's a little harder than the VC route because at least with the VC route, you gotta, like, make a couple people happy. Kickstarter or crowdfunding, you gotta make a bunch of people happy.

Susan Boles:
22:53

It's definitely a volume game.

Lena West:
22:55

Right. You gotta appeal to a bunch of people. It's a different vibe. And so it needs be approached differently. And so give yourself time to get those ducks in a row, to get the production value up, to give the thing that you worked so hard for, the the light it deserves, the highlighting it deserves, the visibility it deserves, the care it deserves to present it in the way that it makes it most attractive.

Lena West:
23:25

The first thing I see people trying to do is you're trying to rush it.

Susan Boles:
23:30

This is something where you need to be spending time and attention and take it on as a separate project. So kind of take me through what a typical crowdfunding process or crowdfunding project might actually look like. So if you're planning on doing this, what are the kinds of things that you need to be planning for and taking into consideration as part of that overall process?

Lena West:
23:55

So first of all, what are you doing? Like, what's the goal? Where are you going with this? And what are the use of funds going to be? Right?

Lena West:
24:04

This sounds traditional already. Right? The prep is almost the same. Right? What are you doing?

Lena West:
24:10

How much do you want and why do you want it? Right? What are you gonna use the monies for? How much of those funds are padding, so cushion margin, and how much of it is, like, actual dollars spent that you're you're planning to spend, and how much of that is, you know, runway so that you can have a little bit of room. Right?

Lena West:
24:30

That's the first thing is to figure out what your goals are. And then especially for service based businesses, what's the positioning? What is the thing that you're promising? What is the outcome? What is the thing that you're going to do?

Lena West:
24:44

What is the outcome? The thing that you're building, what is it? And can people understand it?

Susan Boles:
24:50

I think this is probably the part where for service based businesses, they have the hardest time envisioning what that could be. Right? Traditionally, Kickstarter, you know, you're doing something for a product that you're gonna deliver, or, there's a there's a tangible thing. But for a lot of service based businesses, that's not necessarily true. So help me kind of envision what a Kickstarter campaign might look like for somebody in a service business.

Lena West:
25:23

You know how they say you've gotta productize your service? You've gotta productize the vision. You've gotta productize the vision for the service, which is why I always recommend multimedia. I always recommend video of some sort or models or drawings or something because it helps people to create a mental picture of what it is that they're funding or potentially funding. Right?

Lena West:
25:47

Here's a really good example. Let's say you are crowdfunding for an organization that helps entrepreneurs. Let's just say that. Just a general kind of organization. We'll keep it really simple.

Lena West:
26:01

You don't wanna say, well, we're crowdfunding for an organization that helps entrepreneurs. You wanna have interviews with entrepreneurs that have been through your program before. Maybe not in this iteration that you're funding for, but that have worked with you before, and and video interviews, ideally. Right? You wanna figure out what is the message that we wanna send forth?

Lena West:
26:25

What does our b roll look like in this video? What are we trying to express about this particular crowdfunding campaign? What is the emotion? Because people buy based on emotion, they commit based on emotion. What is the emotion that we want to evoke?

Lena West:
26:40

I like to tell the clients that I work with at this level. I'll say, listen, I want you to imagine that you're making a documentary film about your service. That's the mind state I want you to be in that you're making a mini doc about your service. What are you saying? What is the what's the feeling that you're evoking?

Lena West:
27:02

And then at the end, what's the action step? And what are what's the emotion or emotions that you're going to, evoke to get them to take action? Listen. We all laugh about the Sally Struthers commercials, you know, feed a child, but it evokes it it created the emotion and it works. Yeah.

Lena West:
27:24

It created the emotion that people wanted. And at the end of that long infomercial, it was like, how can I not give? That's where you want people to be. So it's a combination of assets, vision, creativity, and being able to productize your vision so that people can actually see the thing. This saved my relationship.

Lena West:
27:50

This saved my life. I feel healthier, whatever the service is you then get to have this kind of three-dimensional experience of your service. And that is so important. So I would say start with how much do you wanna raise. Start with what is the vision.

Lena West:
28:09

How can you productize the vision. Figure out what assets you're going to need. Right? Actual assets and then, like, what I call b roll assets. And literally, that's b roll.

Lena West:
28:20

And then also other things like, screenshots that you might have, actual models of your methodology, of your process, visual models. And then the other piece is always think of it as before, during, and after. So there's the prep, the before. There's the during, And you need to carve out time to pay attention to that thing. People think you can just set up this campaign and, like, oh, it's just gonna run on its own.

Lena West:
28:46

People are gonna be asking you questions. And if you don't answer, then that breeds doubt. Because if you're not here to answer the questions during the campaign, well, then what are you gonna do when you get my money? Right? That's the supposition.

Lena West:
29:01

So you need to carve out time to just have someone from your team, whether it's you or someone, in there answering questions as people ask questions, as people submit questions. You also wanna carve out time for iterating. So, like, okay, we've been doing this a week and we haven't gotten a dime. Like, what are we gonna do now? How are we gonna change this?

Lena West:
29:24

How's our marketing gonna change? Do we need to buy ads? Like, what what needs to happen so that we get the visibility for this that we need? Because right now, traction isn't tractioning. Okay?

Lena West:
29:36

Yep. It's just not happening. And then there's the after, which I think people also forget about. They forget about the during and the after. They're all about the prep, which is great, but the after is also, for crying out loud, say thank you.

Lena West:
29:53

For crying out loud, make a video thanking your people who invested in you. For crying out loud, give people a roadmap of, okay, so now here's what you can expect next. As people give to the campaign, make sure there's a video that goes to them and said, thank you so much. Here's what we're going to do now. Our fundraise closes on this date.

Lena West:
30:14

Here's what we're gonna do after the week after that, the week after that, the week after that. And these are the milestones at which you will hear from us. Create a visual for that so people can see what that looks like. Create a timeline visual for that. Once you're at the end of that, don't disappear and just put them on some newsletter list.

Lena West:
30:34

Give back to those people. Right? You know what? Here's what we're gonna do for you. You gave us funding last year.

Lena West:
30:42

Thank you so much. You believed in us. We are proud to report that our service is doing so well. And, oh, by the way, we want you to come to this free workshop. I just sent an email out to people who have been sitting on my mailing list waiting for me to launch this incubator, for service based businesses.

Lena West:
31:01

And at literally the subject line of the email is there's nothing for sale in this email. That was the subject line. And I wanna say the open rate was 62%.

Susan Boles:
31:14

It's not not too shabby.

Lena West:
31:16

Not too shabby. Right? Because you wanna thank people. They've been waiting around on you to get your act together and to get this going already, and you wanna thank people and you don't wanna forget about people and just dump them on some email list somewhere. So I would say those are the kind of rough steps.

Susan Boles:
31:34

And talk to me a little bit about what people should think about in terms of timeline and in terms of financial investment to actually do a crowdsourcing campaign well?

Lena West:
31:48

I would say this is least 6 months. At least 6 months.

Susan Boles:
31:56

And is that before it launches, or that's the the whole time frame?

Lena West:
32:02

I would say you could do it in the whole time frame if you have more money than time, which typically if you're crowdsourcing, you don't. But sometimes you do because you just don't wanna go the dilutive route, and you're like, I wanna go I I you, like, sometimes that happens. I would say give it at least 6 months. Typically, 9 months a year is good, which includes a whole lot of planning, a whole lot of being able to iterate with your brand people and get the copy dialed in, a whole lot of creating assets that you'll need throughout, and more time to just plan things out so that you don't feel like you're rushed at the last minute. I encourage people to treat their crowdfunding campaign like a a a separate client.

Lena West:
32:53

In other words, if you're someone who's a consultant and you have spaces to work with 5 clients and you decide to do a crowdfunding, well, now you've got space to work for 4 clients, and the 5th client is you in your crowdfunding campaign.

Susan Boles:
33:07

Right? That makes sense.

Lena West:
33:08

So that's the energy I feel like people should make available to it. And as far as investment, I would say plan on a low figure 5 a a low 5 figure investment, especially if you're gonna do video production and hire a copywriter and branding and such, like, these things add up. If not, if you're a good writer and you've got a friend who's a videographer, then you might look at, you might look at a a high 4 figure investment.

Susan Boles:
33:37

Does existing audience size play a role in what folks can expect to raise out of a crowd funding campaign. Or even if you have a small audience, you can buy ads or other there are other ways to make sure you hit your funding targets.

Lena West:
33:56

There are definitely other ways for you to make sure that you hit your funding goals when you're crowdfunding. However, existing audience makes it so much easier, especially when you can plan. This is what I mean by having the time. Because it's not just about launching the the campaign itself, the crowdfunding campaign. It's also about engaging your existing audience to be part of the the group that is invested in the, you know, in the campaign and engaged in the campaign.

Lena West:
34:26

It's literally you saying to your existing audience, we're about to do something really big and planning and saying, hey. We're gonna do an informational webinar, or we're gonna do an informational training for just the people who are on our list, for just the people who are already in our orbit to let you know, hey. This is where we're going. This is the vision. K.

Lena West:
34:49

This is our goal. This is what we're looking to raise. This is how we're gonna go about it. We're open to your ideas. Do you have any questions?

Lena West:
34:56

What that then allows you to do is it allows you to have almost like a case study group. And it allows you to figure out, okay, what are the questions that people have so we can put that on our crowdfunding page. And it allows you to take that information that you get from that particular session and prepave. So then when crowdfunding actually launches, you don't have to iterate so much.

Susan Boles:
35:25

Right. So it's like a little baby a little baby iteration before the real thing. Do you then envision seeing using, these folks? I've heard it called like a street team for people who, it's kind of the equivalent for, like, when people are watching a book. A lot of the times they'll have beta readers, so they'll have boots on the ground, people that are helping, kind of grassroots promote the thing.

Susan Boles:
35:50

Do you often see them repurposing these folks in that same way?

Lena West:
35:54

Absolutely. You can. I mean, it's all up to, you know, use the the technology to your advantage. Right? So whatever mailing list you're using, have it be a one click opt in to, like, hey.

Lena West:
36:04

You're our straight team. You know? You're you're part of our boots on the ground. You're ambassadors, whatever you wanna call them. Right?

Lena West:
36:12

To me, it's not about the size of the list. It's about how engaged your people are. So I'll take a 1,000 engaged people over 10,000 people that are like, I've got a 4% open rate.

Susan Boles:
36:24

No. That makes sense. So as they're going through this process, I know you mentioned that, people underestimate how long it's gonna take. Yes, they do. Are there other places where people going through this process get tripped up or end up being harder than they expect it to be?

Lena West:
36:45

Yes. When it comes to the actual deliverable part of it. So let's say you decide, okay, we're gonna crowdfund for a film. We're filmmakers, and we're gonna crowdfund for a film, And we're going to give everyone, who invests at x level a preview. You're herding cats.

Lena West:
37:07

You gotta get everyone available on the same day. And when you don't, then it's well, is there a replay? And how do I still see it before everyone else? Like, it's a whole thing. So you wanna have all of that stuff organized as much as humanly possible.

Lena West:
37:22

I would say the deliverables is where things can get hairy, especially if you're promising merch that goes along with your service. If you're promising merch, you're dealing with the postal service or whoever your shipper or whoever you're using to ship your stuff. It's a whole other thing. I think people think that that stuff is just gonna be easy and it's not. They think that those actions oh, I'm just gonna be able to do that.

Lena West:
37:50

Yeah. Well, not so much. Right? The other thing is I would not use the money right away. Sometimes I mean, this happens before the payout happens on most crowdfunding platforms anyway.

Lena West:
38:06

But sometimes crowdfunding platforms can't collect. Like, Kickstarter has a 7 day collection window. Every platform is different. Kickstarter has a 7 day collection window in which they're like, alright. You promised this thing.

Lena West:
38:19

Now we're gonna collect and, you know, they will not extend that window. It's 7 days. That's it. That's all you got. Right?

Lena West:
38:27

So people underestimate they overestimate what they actually are gonna get. Now if your campaign, like my client's campaign, is running at 5 x, then you probably don't have to worry about that. But if you're running kinda neck and neck with the goal, you wanna be really careful that you leave room and margin for the fact that they're not gonna be able to collect on some people.

Susan Boles:
38:51

Oh, I hadn't thought about that. I guess common sense. Maybe it's not common sense there. Like, you kind of assume that if people have pledged this, they're gonna be able to collect. No.

Lena West:
39:02

No. So

Susan Boles:
39:03

I guess not so much.

Lena West:
39:05

And listen. It's not because people wanna screw you over or people are malicious or anything like that. It's just people have really good intentions, and then, like, life happens. You know, things happen in their lives, and they're not able to maintain the commitment. So I would say if it's hair thin there, you wanna make sure that you're not, overestimating what you can collect.

Susan Boles:
39:29

So on the other side of the coin, are there things that would make the process easier, either resources or assets, things that should be created, ways that you should be thinking about structuring your campaign or your deliverables that makes the process go easier, smoother, simpler?

Lena West:
39:49

I would say if you can work with somebody who writes copies specifically for these campaigns, If you can work with videographers or multimedia production artists that work specifically with crowdfunding campaigns, do that. I would say be really clear about the team you need to make this happen. I can't underscore that enough. Right? Do not underestimate who you're going to need to make this happen because all of those things make a difference.

Lena West:
40:22

All of those elements make a difference. And someone who has done a bunch of crowdfunding, a bunch of promotional videos for crowdfunding campaigns, they're gonna be able to fast track it for you. They're gonna be able to say, oh, no. You don't wanna do this. You wanna do this.

Lena West:
40:37

You want this. You want this. This is how we show this visually. They're just gonna be able to fast track it for you in a way that a maybe possibly a traditional videographer may not. So team is gonna be super important.

Lena West:
40:50

Copy is gonna be super important. Being able to translate your vision to visuals is super important because so often, as you say, it's hard for someone to visualize a service based business that, you know, you can't kind of imagine it. And having a checklist of the things that you need, treating this like a legit project because it is.

Susan Boles:
41:16

It is. Yeah.

Lena West:
41:18

Project management. Huge.

Susan Boles:
41:21

Okay. So other than crowdfunding, are there other funding options that you think service based businesses should be considering when they're thinking about funding their business?

Lena West:
41:33

Absolutely. Grants, fellowships, stipends, entrepreneur in residence programs, all of those.

Susan Boles:
41:44

Interesting. Are there specific places or circumstances where you think certain types of businesses fit with certain types of funding options or folks should be exploring these options regardless?

Lena West:
42:01

I feel like if you've decided we're going to go the non dilutive funding route, but we do need funding, then a portion of your day or your week, depending upon how urgent the need for funding is, needs to be dedicated towards finding those funding sources and applying. Sometimes the application is like, hey, fill this out, tell us a bit about your business, you know, upload your deck, that sort of a thing. And then sometimes it's more in-depth and it requires an interview. I filled one out recently, with a client and it required a Loom video. You know, it depends.

Lena West:
42:32

But I would say, if you know you need funding, then carve out time every single day. Just like you would if you were prospecting, just like you would for sales, carve out just like you would for marketing, carve out time. If you know this is the route that you wanna go for your funding, carve out time to actually find funds that fit for you. I would also, a little sneaky trick, if I may, share if there's a company in your industry that has received funding or if you know that a founder has gotten some non dilutive funding, set up a Google alert. We're a Notion shop.

Lena West:
43:10

So we'll set up a Google alert, and we'll create a Notion database with our clients. And so we'll say, listen. We missed the application window just because by luck of when they reached out to us to do this type of work, they missed the deadline. So next year, this is on your calendar. Here's the link to the application, and these are the assets that you're gonna need.

Lena West:
43:33

Get your assets together ahead of time so that when it comes time to apply, Bing. Now here's the thing. People always ask me, Lena, does it make sense to apply right when it opens or more when it closes or more towards the middle? And I feel like it makes more sense to apply right when they begin, and here's why. Typically, funding non dilutive funding sources like grants and fellowships and such, their board is reviewing this or they've kind of developed this kind of adjunct board.

Lena West:
44:11

And by the time they get to the end, they're like, nobody's getting anything. I don't wanna watch one more of these videos. I wanna go home, pass the freaking chocolate chip cookies already. Like, I'm done. And so they typically make up their mind early.

Lena West:
44:26

So the earlier you can apply in the funding window, the better.

Susan Boles:
44:32

So is there anything you think we should talk about that we haven't touched on yet, either around non dilutive funding as a whole or crowdfunding, crowdsourcing specifically?

Lena West:
44:44

Listen. I think it's important for us to say that VC and Angel Funding, it's not, you know, evil and, you know, taking over the world. I just really feel like there are other options now, and why not explore those options? I would also add that each time you decide to fill out the grant application or fill out the application to receive a stipend or whatever it is, whatever non dilutive funding is, or do a crowdfunding campaign. Each time you decide to do that, it gets easier.

Lena West:
45:23

It gets better because you have assets you can leverage. You you know the ropes a little bit more. And especially from a grant perspective, I think if you're gonna go the grant route, one of the things that you need to know is and this is no dis for grant writers. I am not saying that at all. Grant writers are needed.

Lena West:
45:43

We need our writers. You don't have to have a grant writer if it's your first rodeo. Right? You can write your own grant application. Typically, what grantors are looking for is your use of funds.

Lena West:
45:58

So what are you gonna do with the money? And they're looking for, do you fit with the folks that we wanna help with this grant? Like, is there a fit? They're not looking for you to do all the pros, and in fact, that can kinda work against you. They just want you to be real.

Lena West:
46:15

They want you to be honest, and they want you to be passionate about what you're doing. They're not looking for you to be a grant writing expert. They're looking for you to be you, the founder of this thing. They're looking for you to be passionate, and they're also looking for you to have have made some tracks on your own. They wanna see that, hey.

Lena West:
46:36

You've been doing this and you're committed to this and not just looking for a check.

Susan Boles:
46:43

Thank you so much for being here and for this conversation. It was so it was so good.

Lena West:
46:49

Thank you. Thank you for having me.

Susan Boles:
46:51

Where can our listeners find you if they want to connect or learn more about you or what you do?

Lena West:
46:57

They can find me on LinkedIn, and they can also find out more about our ink. It's the first of its kind for service based business owners. It is an incubator accelerator hybrid. It is not for the tech bros. It is for us, the service based folks, and they can find out all of that information at ceorising.co.

Lena West:
47:20

Not dot com, but dotco.

Susan Boles:
47:22

Awesome. Well, thank you so much for being here and for sharing with me. I really appreciate it.

Lena West:
47:28

Absolutely. Thank you.

Susan Boles:
47:34

Crowdfunding can be a really great option for you if you've got a new service or a project you're launching. I've seen it used really successfully to launch books, communities, and more. Even something as small as offering a Patreon for your podcast or a Substack for your newsletter is actually a form of crowdfunding and can be a great way to supplement your client revenue and diversify a little bit. This whole theme is talking about all different ways you can fund your business, but you don't have to pick all of 1 or all of another. You can pursue different types of funding and diversify where that cash is coming from.

Susan Boles:
48:10

You can mix and match to suit your needs or to support different products in different ways. For example, my own business has lots of different types of funding sources. I work with clients as a fractional CFO and business advisor, but I also have sponsors that I work with that support both my podcast and my newsletter. I work with a few companies as an affiliate, and that brings in some supplemental revenue. But I also have a few lines of credit that I tap into from time to time.

Susan Boles:
48:37

I have an SBA loan that I took on when they were offering loans directly to business owners during the early COVID stimulus efforts. And that's what we're going to be talking about in the next episode, using debt strategically. So make sure you are subscribed in your favorite podcast player so you don't miss that one. And if you know a fellow business owner who is thinking about how to fund their own business, please share this episode with them. I really appreciate it, and it helps me get the information out to more people who need it.