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Doctor and entrepreneur Shaan Patel, 35, graduated from school debt-free.
The secret to Patel’s success was studying extra hard to raise his SAT score from average to perfect when he was in high school. Even though he was rejected from every Ivy League school that he applied to with a perfect SAT score, he was still offered $500,000 in college scholarships from some of the top schools in the U.S.
Because he was awarded such a large scholarship in undergraduate school, Patel received extra checks from the financial aid office at the end of each semester for living expenses and books. He used $3,000 in extra scholarship money to invest in the earliest stage of his company, Prep Expert, a digital SAT and ACT prep course company. Prep Expert is now worth millions of dollars and has helped over 100,000 students.
We can learn three things from Patel about starting a business that earns $150,000 annually in passive income.
After spending hours perfecting his course curriculum, Patel spent $900 for the original Prep Expert website, $1,000 to rent a classroom in his hometown of Las Vegas, and about $1,000 on marketing. His first class took place in the summertime, between school semesters, and included 18 high school students eager to raise their scores.
“The average increase in our students’ scores was 376 points, the equivalent of taking a student from the 50th percentile to the 90th percentile,” explained Patel in 2022. Once parents began to see results, Patel got requests for more services, like tutoring for math and science.
While he didn’t set out to specifically make a digital course company that earns passive income at the start, Patel started with an experience that changed his life. When Business Insider asked Patel what advice he has for others looking to start their own passive income streams, Patel said, “Start with what you know.”
Patel had the opportunity to pitch his company to Shark Tank and won a $250,000 investment from Mark Cuban in exchange for a 20% equity stake.
Patel used that money to hire more employees who could create digital courses and provide real-time tutoring for high school kids who needed help in other subjects. Originally, Patel and Cuban had plans of opening physical locations all over the country, successfully opening locations in 20 different U.S. cities.
When asked what Cuban is really like, Patel says, “He is the most down-to-earth billionaire you’ll ever meet in your entire life, very humble. I can email him at any time and he’ll usually respond five minutes later.”
Because the pandemic changed the way students learn, Patel and his team had to pivot from in-person teaching to creating self-paced digital courses that students can access anytime.
Even though Prep Expert offered SAT and ACT prep classes online in 2016, “People weren’t used to online learning yet, but COVID-19 has definitely accelerated people’s comfort levels with learning online,” Patel said. Sales of digital courses helped his business scale faster.
“Now,” Patel urged digital creators, “is an amazing time to scale online courses.”
Don’t know where to start? Consider a financial advisor.
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This article was originally published in February 2022.
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