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"'Ask the Small Business Professor' is a must read for small business owners looking for free expert business advice. Using a Q&A format, Bruce Freeman covers important small business topics weekly by bringing in recognized experts on subjects including accounting, legal issues, trademarks marketing and sales. Don't miss it!"
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Angels of a Different Feather
From time to time in this column, I discover people who have made an impact on small business nationwide. Such is the case with The Sloan Brothers: Jeff and Rich. Jeff, the elder brother by seven years, has always been an entrepreneur. Instead of mowing lawns, he decided to buy a HUD home in downtown Flint, Michigan while still a teenager. In his 20’s, he came up with the idea to keep batteries in cars from dying even when unused for long periods. Jeff, in partnership with his brother Rich, applied for a patent for Battery Buddy, as the product was called, and licensed the technology to a company, who promptly hired them to do all the marketing and sales for the product. In 1990, at ages 29 and 22, they had already earned over $1 million in royalties from Battery Buddy.
As everyone knows, inventing a product and getting it to market successfully is very difficult. Based on the number of people contacting them for advice, Jeff and Rich sensed an opportunity. Many inventors need help in marketing their inventions, but are wary of companies that charge huge up-front fees. The Sloan Brothers’ better idea was to help inventors get started licensing their products and to take a percentage of the royalties if the product became successful. Soon, using their expertise and experience, they were able to help get six different products licensed to various companies. Later, they helped to create complete companies including the development of investor and business plans in return for an equity position in the inventors’ companies. To date they have launched 14 high tech companies. But this isn’t the end of the story, it’s just the beginning.
So many people began to contact them and ask for help, that they designed a website to help people get started in business. www.startupnation.com was developed to provide information, inspiration and access to resources that most entrepreneurs need to know but have trouble finding. They knew that entrepreneurs could get information from other sources, but they wanted to do it in a personal way, sharing their expertise others in a clear, user friendly manner. Soon after, Startup Nation became a radio show that takes phone-in questions and publishes an e-newsletter as well. Now as radio show hosts and angel investors, helping others has become their passion as well as their livelihood.
The Small Business Professors' Words of Wisdom
In interviewing Jeff and Rich, it became clear that they have much advice to offer entrepreneurs. One of the most interesting parts of the conversation was about investors. Their advice was simple, but profound. Creating a business plan is a requirement for every successful business, not just those requiring outside investors. It helps to educate you – helps you think things through and create a road map. Not every company should seek investors; if you can come up with a business plan that bootstraps your business and fund it yourself, you are much better off. If you find that you can’t finance things on your own, don’t look for venture capital, look for angels. Angel investors are people who know you and are willing to take a chance on you (Aunt Millie may be your best chance.) or people who are looking to get in on the ground floor of a good idea. Finding outside investors may not be as hard as it seems. You must go to whatever networking events you can. Talk to other entrepreneurs who have accessed angel investors. Try to get a name or an introduction; many angel investors know one another and there are even angel networks on the Internet. Remember that your first investor can become a champion for your cause. Angels like to be rewarded with financial income, but like everyone else, they also appreciate psychic income, which feeds their emotion and intellect. Make sure that you offer an advisory board or other ways to “pay back” your investors in the short run. Angels also become an important source for advice and resources.
- Case History: Jeff and Rich Sloan www.startupnation.com
- Entrepreneur’s Strategy: They became angel investors by creating companies to market inventors’ products.
- Could This Work For Me? Look for angels or consider becoming one.
To date they have launched 14 high tech companies. But this isn’t the end of the story, it’s just the beginning.