Creativity certainly helped Jeff Kohler, 39, and Chris Hotz, 37. With little more than a business plan and some solid management experience with AT&T, Cell-One and Nippon, they raised $250,000 from friends and family. (Kohler defines them as "people who will still love you if you lose their entire investment.") It was enough money for the partners to launch Reason Inc., which helps companies manage their wireless products and services.
Almost immediately after their 1998 launch, however, Kohler and Hotz needed $1.5 million more to cover 1999 operating expenses. Fortunately, they found additional help in the form of angel funding from two former Pittsburgh Steelers: Carnell Lake, a Pro Bowl safety now with the Jacksonville Jaguars, and Rod Woodson, a defensive back now with the Baltimore Ravens. Such high-profile investors cleared a path for the company to score with other investors.
Like Kohler and Hotz, a determined entrepreneur with a good idea is better off pursuing creative financing. The right business plan is critical. If writing isn't your strong suit, consider engaging an expert to forge a winning proposal aimed at potential investors, even if they're family and friends. Your accountant or attorney could refer you to a specialist, strategist or financial consultant to design a professional plan for you-one that is well-organized, clean and clear. As a bonus, strategists are ideal sources of leads. Just mentioning you have a financial consultant will likely impress potential investors.
Put together the right package and you'll attract the right investors. You may not have to look too far. You're probably already well-connected, directly or indirectly, through:
- people you've worked with or done business with in the past,
- prospective customers,
- businesses that sell to the same kinds of customers you sell to,
- companies that might be interested in complementing their product line with your product, and
- manufacturers who might want your new store to carry their lines.
Knowing your product, your industry and the people in that industry, you no doubt have insight into all kinds of leads and connections.