Investors: It's a great time to start a business
By ED MERRIMAN
Baker City Herald
In small towns across America, changes in the global political climate and economy are spurring demand for all manner of local products, according to “angel investors” who spoke at the June Pubtalk earlier this month in Baker City.
“We’ve had the worst recession since the 1980s, and there’s been a structured shift in the economy,” said Wayne Embree, one of three investors who participated in the panel discussion at Quail Ridge Golf Course.
“Large companies laid off a lot of people who will never go back, but a lot of jobs sent overseas are coming back. It has to do with changing ideas about buying local, national pride and things like that. This is the perfect time to be an entrepreneur,” Embree said.
Joining Embree, who’s the founder and managing partner in Reference Capital and Cascadia partners, were: Jim Noonan, managing director of R4 Funding LLC and president of Pivot Point Capital Corp.; and Linda Weston, who started the Portland Power women’s professional basketball team in 1996 and has been president and executive director of Oregon Entrepreneurs Network since 1999.
“You can build world-class companies anywhere,” Embree said. “The key is understanding what customers want and how to get it to them. We work with people who have an idea, but don’t have the money, experience or know-how to run a successful company.”
Noonan said about the same percentage of rural businesses that work with angel investments succeed as compared with urban businesses.
Launching a business in a small town like Baker City shouldn’t be viewed as a disadvantage, he said.
“You know, an investment of $25,000 or $50,000 in seed money can make a lot of difference in Baker City,” Noonan said.
Watson explained that the term “angel investors” originated with investors in Broadway musicals during the 1930s and 1940s.
“These investors really are angels, because they provide the money, counseling and coaching that help make that business a success,” said Watson, who was twice selected as one of 25 outstanding women in business by the Portland Business Journal, and in 2007 was recognized by the Northwest Women’s Journal as one of the 100 most powerful women in the Northwest.
All three members of the panel told Pubtalk attendees that having a well-researched, well-written and concise business plan of about five pages is a vital first step to attracting seed money from angel investors.
“The business plan should be five pages that shows why it works, and who will buy it today and in the future,” Embree said. “It’s the thought process that counts.”
Noonan said most investors have a social conscience, and they want to help businesses succeed.
“Most investors want to be proud of what they invest in,” Noonan said. “At R4 Funding, we have a pool of investors looking for ways to improve the community and the planet.”
Watson said the question investors want to have answered before they invest is: “Can you do it better or more efficiently than somebody else?”
Noonan suggested that in developing a business plan, would-be entrepreneurs talk over their ideas with successful business people over a round of golf, for example, and ask them to help identify holes in the plan.
“Learn from experienced investors,” Noonan said.
Although some businesses are launched on a shoestring, with investments from friends and family, Embree and the other panelists cautioned against relying too much on help from relatives and close friends.
“Investing purely out of love is noble,” Embree said — but having a supportive network of family and friends to provide the moral support, encouragement and help juggling family obligations with business demands is more important than money to the long-term success of a business.
It’s better to choose an investor who’s willing to put up $7,500 but has run a successful business and wants to offer some guidance and help you succeed, than to take $10,000 from someone who is going away, Embree said.
Noonan pointed out, however, that angel investors are not going to be involved in the day-to-day operation of the business.
“Angel investors have the money and experience to invest in somebody else’s dream, but they want somebody else to work 100 hours a week to make their dream come true,” Noonan said.
Local entrepreneurs also made five-minute pitches during the Pubtalk, including Kurt Miller, owner of the Baker Truck Corral.
Miller said he actually took the leap to buy into the truck stop just as the recession hit, but after managing the business he had seen its potential and envisioned ways to make improvements that he believed would make the business more successful.
“We have been able to turn it around by being what our customers want us to be,” Miler said.
He said he’s seen the shifting tide of customers craving everything local that they can get their hands on, and that goes for all three segments of his clientele, including truckers, travelers and locals.
“People come in and they want things made in Baker City,” Miller said. “Tourists want anything that says Baker City on it, and you can’t find it anywhere else in town.”
The craving is for things that are made in Baker City, by Baker City people, and Miller said he often sees customers turning over coffee mugs and checking tags on gifts and collectables to see where the products are created.
Miller said he’s noticing people don’t want to take home memorabilia about Historic Baker City or Hells Canyon that has “Made in China” stamped on it.
Baker City business owners Sean Lee of Big Horse Woodworks and Chris Dunn of Chis Dunn & Associates, also made brief pitches about their businesses during the Pubtalk.
Lee is starting a business making custom furniture in Baker City to sell to high-end clients locally and as far away as Boise, Bend and other areas.
“Sean is going to be building really high-quality, custom built furniture for expensive homes where people want to furnish them with the best,” said Jake Jacobs, with the Small Business Development Center, which organizes the Pubtalk events along with sponsors such as Community Bank, Old West Federal Credit Union, Oregon Entrepreneurs Network.
“We won’t know the real value of Sean’s furniture until it is an antique, and people will be saying ‘I want to get a Sean Lee piece,” Jacobs said. “It’s that good.”
Dunn talked about the necessity of taking risks in building a successful business or group of businesses, as he has done in Baker City.