When Earl Mollerud went looking for investors so he could expand his chain of children's hair salons, he didn't like the reception he got. Says the founder of Minneapolis-based Kids' Hair, "I fell flat on my face."
Mollerud presented the problem to a group of business owners, fellow members of a club who meet monthly to discuss each other's problems and prospects. Although none of the advisors were from the hair salon industry, with their combined years of business experience, they were able to map out a successful route to private placement.
"They helped me find the path," says Mollerud, whose company, with the help of the added capital, now has four locations and 50 employees.
Thousands of entrepreneurs have discovered that a group of advisors like Mollerud's comes in very handy--so much so that they pay $2,000 to $10,000 in annual membership dues, and devote several hours a month to prepare for and attend meetings. These exclusive entrepreneurial peer groups have been growing quietly for nearly 50 years now and can be found in almost every U.S. city.
Entrepreneurs who join such peer groups report high levels of satisfaction and rejoin year after year, says Karl Egge, an economics professor at Macalester College in St. Paul, Minnesota, who has studied peer groups. The reason, he says, is simple: "It's a smart use of money and time."