Smaller businesses have an age old problem. They cannot raise enough debt equity through the banks in order to grow. Why? Because their balance sheets won't allow them to get another loan from the bank. Their assets are already tied up with a previous loan and the bank will not lend them anymore money
because they are currently overextended. How can this problem be overcome? How can you raise more money to grow your business?
You can raise money using the DPO (Direct Public Offering) Process. There are basically 2 ways to raise money for your company:
1. Debt financing
2. Equity financing.
Debt financing is provided by the bank. Equity financing is provided by investors. You can raise the money you need by the DPO Process.
Basically you can raise from $1 to $5 million dollars using this process and a DPO is probably one of the cheapest ways to raise funds for your company. There are only a few companies who can help you with the process. The startup cost for this can be very reasonable compared to other types of Public Offerings. The government has set up advantageous laws to accommodate the company using the DPO Process.
You have to ask yourself a few key questions before you begin the process:
1. Would an investor be interested in investing in your company?
2. Is your idea or business unique in any way?
3. Is your idea national or international in scope?
4. Can you think in terms of being a $50 million dollar company in order to obtain a reasonable market share?
5. Can you return 5 to 10 times profit to the investor in 3 years?
6. Are you willing to expose yourself to the open market?
7. Are you willing to take the risk to the point of failure?
8. Are you willing to spend a substantial amount of time raising the capital?
9. Who can help guide you in this process?
These are a few of the questions you need to ask yourself and they are tough questions. The seriously interested investor will be asking these questions and will want the answers before they decide to invest.
Every business owner wants to obtain more money for the business but at what cost? You have to set lower and upper limits on what you will give and what you will get.
As in any venture there is risk associated with a DPO both for the investor and the business owner. There are legal and marketing aspects to consider.
If you try to do the process by yourself you will probably get through the legal aspects but fail in the marketing of your DPO. You need to work with professionals who have knowledge & are expert in the DPO Process. |