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3. Company and management meet standards of
honesty and social responsibility.
When people invest directly in share ownership of
a company, after making their own decision and using their own
money, they feel a sense of identity with that company. Polls
consistently show that an overwhelming percentage of consumers
prefer products from companies that aren't causing harm. That
carries over to buying shares as well.
4. The business can be understood by people who
may have no experience investing.
Shares are sold in a DPO when someone reads the
prospectus, and sales are lost when this prospectus is difficult to
understand. Try describing your business in ten words or so. Also,
try telling your whole story--what your business is, what you're
going to do with the public's money and the particular risks of
investing in your shares--in a one-page memo.
5. The Company has natural affinity groups, with
cash to risk for long-term gain.
Affinity groups may be easier to explain your
business to, but also need to be large enough to buy your entire
offering. For instance, people in the same area of town may be
likely investors, even if they aren't also customers. Other groups
may be interested in the particular technology or corporate mission
of a business. Along with the number of potential investors,
consider strength of the affinity (how loyal do they feel toward
your company).
6. Those affinity groups will recognize the
Company's name and consider its offering.
DPOs for companies with consumer branded products
should carry the logo, slogans and color identifications through
into the share offering materials. Companies with names that are
entirely different from their product names must transfer the
feelings about the known name over to the new one. The greatest
challenge is to create recognition for a company with no current
identification among affinity groups.
7. Names, addresses, phone numbers and
demographics are in the Company's database.
There are ways to "profile" those customers and
figure out how to reach them through selected media.
8. A Company employee is able to spend time as
project manager, directed by the CEO.
There needs to be one person for whom the DPO is
the top business priority. Experience has shown that anything less
than that will lead to slippages in the schedule and a decline in
enthusiasm for getting the job done. The ideal is someone earlier in
their career who works directly under, and speaks with the authority
of the CEO or CFO.
9. The Company has, or can obtain, audited
financial statements for at least the last two fiscal years.
This is the requirement for the new securities
law filing forms made available to small businesses (under $25
million annual revenue) by the federal Securities and Exchange
Commission. Unless the company has been in business less than two
years, we suggest that you not try to save accountants’ fees by
using unaudited (even "reviewed") numbers. In cases where prior
years would be difficult or impossible to audit, or where accounting
records need to be put in auditable shape, it may be best for the
company to arrange some private financing until it is ready for
public scrutiny.
John B. Vinturella, Ph.D. has
almost 40 years experience as a management and strategic consultant,
entrepreneur, author, and college professor. For 20 of those years,
Dr. Vinturella was owner/president of a distribution company that he
founded. He is a principal in business opportunity sites
jbv.com and
muddledconcept.com, and maintains
business and political blogs.
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