Last Updated Jul 29, 2010 3:32 PM EDT
I didn't always think of my golf career as a business -- I just wanted to play on the PGA Tour. I thought if I was passionate enough, the rest would fall into place and I wouldn't need to worry all that much about a business plan. It didn't take me long to realize that's probably the worst way to run a business.
Unless you're independently wealthy (I'm not -- I come from a middle-class family in Tennessee), you have to raise some capital to play the Nationwide tour. I travel close to 300 days a year to play in roughly thirty tournaments and close to the same number of Pro-Ams. On average, my budget is about $2,000 week -- that includes travel expenses, my caddy, tournament fees, everything. That adds up to $96,000 a year. Of course, part of my revenue comes from sponsorship deals (like one I have with BNET) and playing Pro-Am tournaments, where you can make anywhere from $500-1,000 for playing a round with amateurs. But investors help make up the balance.
When I was starting out, I put together an LLC and offered eight shares at $12,000 a piece. Typically, investors get a very hefty portion of winnings: 90 percent of what I make until they get their money back. Then we split it 50/50 until they double their money. And then for the rest of the contracted years, I get a 90/10 split.
I was young and inexperienced and so I took my first group of investors at their word. Due to the recession, two of the investors ended up backing out, leaving me about $25,000 short of what I needed. I talked with the rest of the group and we made a verbal agreement on how we would subsidize the shortfall. My big mistake was not insisting that it become part of the original contract.
When the end of the year rolled around, none of the investors acknowledged the verbal contract we had made six months before. I had made roughly $100,000 in winnings but they got every cent -- and they said I owed them $25,000. On top of that, they accused me of fudging my accounting and hiding money. It was a nightmare. I was furious - not just with them, but with myself.
That experience trained me well. Now, I'm much more businesslike in my dealings with investors. I'm meticulous about tracking my accounting. And now everything that I discuss with potential investors goes in the contract.
At the same time, I also learned an important lesson about handling potential investors. I make it clear to them that investing in a golfer isn't like investing in any other business. Backing a golfer is probably the worst investment you can make -- you're investing in a human being. It's not like a consumer product that has been tested in a million different markets. It's a huge gamble. So they've got to understand that it's risky. Just as important, the payoff has to be more than the money. Now when I look for investors, I pick the people who are also in it because they love the game.