Sayulita, Funding, and Time Off

Spring is here! I’m a day late getting the newsletter out this week. We are in Sayulita, Mexico for the month and took off the first week for our children’s Spring Break. I forced myself to be off for a few days.

It was tough to fully cut off, but I feel like when I do, business ideas just hit me out of nowhere. An advisor once told me sometimes you need to work “on” your business and sometimes you work “in” your business. I feel like this is even taking it one step further. Stepping back a bit, letting it run and seeing it from an outsiders perspective.

This is our second time to Sayulita this year, and I love the vibe here. It’s a slight bit of chaos mixed with activity (yoga, surfing, sauna, etc) and some really incredibly healthy food. I try and use this time to break my typical daily routine and mix in more work life balance. The entire city is walkable here so it’s really easy to time block work, fun, and health activities.

It’s the perfect place to remote work for us with the family and the perfect antidote to the long winters of Telluride, Colorado (where it’s still snowing).

Startup Playbook: How to Fund Your Idea

This week let’s chat about how to secure the funds to turn your vision into reality. Let’s explore an overview of funding options, each with its unique advantages and considerations. Understanding these options can empower you to make informed decisions that align with your business goals. This can be where a lot of people get stuck and decide not to take the leap, so super important. We will dive in deeper on these in the following weeks.

Equity Financing: Investing in Potential

Equity financing involves exchanging partial ownership of your business for capital. It's a popular route, especially if you're looking at long-term growth but be cautious—this option isn't ideal if you're unsure about an exit strategy. Here’s a breakdown:

• Friends and Family: Often the first call, this option hinges on trust. Only go this route if you're confident in your venture's viability—you're not just risking capital but also personal relationships.

• Angel Investors: These are individuals ready to back early-stage companies. Unlike friends and family, angels are motivated by potential returns and usually bring invaluable experience and networks along with their investment.

• Venture Capital (VC): For businesses with high growth potential, VC funding can provide significant capital. However, VCs usually seek more a bit more control and a clear exit within a few years.

• Private Equity: This is typically for more established businesses that need a substantial investment to expand or restructure operations.

• Crowdfunded Equity: Platforms like Wefunder offer a modern take on equity financing, allowing you to pool smaller investments from supporters into a single, managed entity.

Debt Financing: Borrowing Smart

Debt financing means borrowing funds that you'll need to repay over time. It's a versatile option but comes with the obligation of regular repayments:

• Short-term Loans: Tools like Shopify Capital or Wayflyer offer quick cash but often at higher interest rates. They’re suitable if you have existing sales but consider the cost against your profit margins.

• Term Loans or Lines of Credit: More suited for stable businesses, these options can help manage cash flow or finance inventory, generally at lower interest rates than short-term loans. There are lots of options here. Shoot me an email if you are in this phase.

• Credit Cards: Useful for immediate expenses, especially in the early stages of a business. Be mindful of high interest rates and strive to pay off balances quickly to avoid debt spirals. We like the Amex Business Gold Card and the Chase Business Ink due to the points your can accumulate.

Alternative Methods: Creative Capital

• Crowdfunded Pre-Orders: Platforms such as Kickstarter or Indiegogo allow you to introduce your product and secure orders before production. It’s like getting an interest-free loan funded by your future customers, lowering the initial financial burden and validating your product market fit. We have raised over $3m on these platforms for Western Rise and has helped us remain very capital efficient in our early years.

Each funding path has its merits and risks, and the right choice depends on your business model, growth strategy, and risk tolerance. At Western Rise, we have used a combination of most of these for launching and scaling our business. Typically we like to pair Kickstarter for new category expansions with short term debt or term debt for inventory and then we utilize equity for things like team growth or larger growth initiatives in marketing. Again, we will dive in more on these in the coming weeks, but if you want to chat more about any of these, just reply to this email.

Founder Playbook: Taking Time Off

Kelly and I are really really bad at taking time off. I used to run Western Rise as a side project. I would leave at 6am for my day job, commute an hour, work from 8-5, then commute an hour back to our home garage and work on Western Rise from 6pm till 2 or 3 in the morning packing orders, setting up marketing campaigns, or whatever else needs to be done. As a founder, you transition from doing everything at all hours of the day to starting to hand some things off. A friend once told me if the business can’t run without you, you have a job not a business.

This week we took time off. We tried our best not to be in email and slack everyday and just relaxed. We spent time on the beach with our kids, we ate street tacos and just enjoyed a bit of downtime. Was it the best week for sales? No. Will the business survive? Yes.

You have to be able to have that kind of flexibility and I urge you to think about it from the start.

Built systems, recruit great team members and assistants that make sure things don’t go completely wrong when you are out. You’ll need that time to ensure you don’t completely burn yourself out and make sure your business thrives in the long-run.

Automation Playbook: Customer Service

Getting yourself out of your customer service is a huge first step in freeing up your time to work on growth.

Customer service is great early on when you haven’t yet found product market fit. There’s huge amount of valuable product feedback there. But, once you have, you need to offload some of that.

First, as referenced in our previous emails, you’ll need to document how you spend your time, create repeatable responses for the questions that keep coming up and find someone to help!

We have had great success finding customer service agents in the Philippines. They work on our time, immediately learn our systems, and can do the job very well. They keep us updated on any issues that arise and for the most part are able to fully manage the channel with a 95% customer satisfaction score (this is incredibly high).

I highly recommend starting to document your process immediately when you start shipping orders so you can quickly hand this off.

That’s it for this week! If you want to add anything, or just want to say hey, shoot me a response!

Will

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