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Funding an e-business - Q & A

Brian calls in from Denver to get advice on how to fund projects for his e-business that sells video content for churches.

Rich Sloan: We’re gonna start with Brian out of the mile high city, welcome to the show Brian.

Brian: Hey guys, how you doing?

Rich Sloan: Doing great today, how are you?

Brian: I’m doing really well. 

Jeff Sloan: So how are things in Denver?

Brian: Actually they’re sunny.

Jeff Sloan: All right.

Brian: Yeah, it’s not really cold, it’s kind of mild if you call, you know, 55, 60 mild.

Rich Sloan: Denver actually gets really great weather, I love it.  I love it when the snowstorms roll in, I love those sunny days…

Jeff Sloan: Three hundred days of sun, something like that, yeah.

Brian: Yeah, absolutely, that’s cool thing about it.

Jeff Sloan: All right, let’s take care of some business.

Brian: Well here’s what I have guys.  I’ve got a business that’s an e-commerce web site called the vigilchurch.com and basically what we do is we sell video content like sermon illustrations, short stories and worship backgrounds to churches and religious organizations.  Now since the majority of the business is sales oriented I was advised to incorporate it as a for profit, LLC.  Well and that begs the question that I’m gonna ask you guys, you know, is in regards to funding of the video content.  It can be expensive, as you might imagine, so I’ve gotta couple of people that are already said they’re willing to, you know, give me like a- a monthly, you know, donation so to speak to kinda keep the business going and stuff like that but I’ve also thought about developing a second organization as a non-profit fundraising vehicle that would underwrite the production of the video content.  So…

Jeff Sloan: Well first of all uhm.. I think Jeff and I are looking at each other and saying to ourselves now we recognize the concept of your business and were you– did you do an elevator pitch or did you call in once before?

Brian: I haven’t done an elevator pitch but I have called into you guys.  I don’t know if I could do an elevator pitch.  I’d have to think about that.

Rich Sloan: Yeah, well think again.

Jeff Sloan: Take a lot of courage.

Rich Sloan: Well that’s great.  You know, we re- we remarked before the business sounds interesting and it does indeed.  So the question is how do you defund- fund the development of the content that you wanna sell and I guess the first question is - tell us about that process.  How does that happen?  And then maybe we can think through some strategy on how to- how to get it funded.

Brian: As far as producing the content?

Rich Sloan: Yeah, just, you know, so let’s say you wanna develop some content.  If I say let’s develop some content today for the business what do we do?

Brian: Well what I need to do is I’d need to sit down and decide, you know, like what we’re- what kind of product?  Is it gonna be a worship video background that would play in the background during a worship service or would it be a short story?  So the purpose of conversation I would prefer to produce short stories, it’d be like a short film, like say 2 to 3 minute video.  So we’d sit down and we’d choose a topic or an issue to address.  So we’d write a script and then from the script we decide, you know, what we would need as far as resources.

Rich Sloan: What do you think your costs are in getting something like that done?

Brian: Well, you know, I’ve produced a bunch of different videos for different clients and one client in particular does produce content and sells it to different churches mainly like vacation bible school material curriculum and includes video.

Rich Slaon: Is this a cross- just one more question on this and then we’ll try to give you some help here.  Is this a cross denominations uh.. the content or is it for specific churches serving specific denominations?

Brian: Yeah, it’s definitely cross-denominational.

Rich Sloan: Okay, well Jeff, you know what, here’s one thing that I’m thinking right off the bat.  While you have individual churches, for example, that might be the users of this, the consumers of this, you might have the- the kind of the uber entities that are the national organizations that tie these denominations together wanting to back product like this that then can go out to the churches in their denominations.  And so…

Jeff Sloan: That’s interesting.  The other thing you can do is- and correct me if I’m wrong Brian about this strategy as I go through it.  What about the possibility of you taking sample content in and getting advanced payment in some kind of one third at time of prod- start of production, one third at completion of production, one third on delivery, something like that.  And that way you can actually fund the product development as you go.

Brian: Yeah, as far as you mean like find a client that would want the product and then…

Jeff Sloan: Exactly.

Brian: Yeah, that- I mean that’s a possibility.  I work for a church part time as it is and they have opened the door that as I produce content for them that I can have the rights to use it for- for my business.

Jeff Sloan: Oh, that’s exactly what I would do.  I’d walk in with a portfolio of content, go presell the content, say this is what I can deliver to you, take an order uh.. from them and have the payment terms be one third on close of order, one third on completion of production and one third on delivery.  Something like that and– and make sure your budget matches up with uh.- with the- the revenues coming in so that you can cover your costs along the way.

Rich Sloan: And, you know, Jeff with a situation like Brian, you know, part of what’s he gonna have to do is prove that he’s good at what he does and I always believe in creating a sample of it, getting it out there, getting it used, getting testimonial and then using that in your marketing.

Jeff Sloan: Right.  Well and I’ll tell you the best way to fund your business activities is either through your customers or through your strategic partners.  If you can get money in the door without having to in- have either a bank loan taken out or without having to have investors invest in the business that’s always better.  Who wants investors if you don’t need them?  Think creatively; get the money on a revenue basis from your customer base if you can do it.