Take Your Company Public – Have Investors Begging to Invest!

As the economy worsens and banks continue to crash and the US dollar is losing its place as the world currency American entrepreneurs need alternative funding solutions that cater to ongoing capital needs that take advantage of the international finance stage as opposed to domestic institutional lenders.

Many companies, for the first time, are considering going public as a viable option but where does one start on this trek? How much does it cost? What type of lawyer and consultants do I need? Who sells my stock? Etc.
The reality is, going public is fairly straight forward if you have a product or service that lends itself to an invest-able option to global financiers.

The process of a start-up or small/medium size business going public usually begins with the basic business plan (50 to 100+ pages in length) and a Private Placement Memorandum (Regulation D Rule Exemptions 504, 505 or 506). The company would then do an initial round of funding with accredited investors with a mini/maxi built into the offering circular that makes it possible to reach a simple benchmark that would allow the company to start using the investment cash for growth via public offering using OTCBB (over the counter bulletin boards); this is the quickest and cheapest way to go public being that 99.9% of companies don’t have the liquidity and time in business to qualify for an IPO.

There are several things that a company can do to make your capital raise a pleasure and not a nightmare. Start with a solid market maker that will commit to putting forth a dominating effort to sell your shares. The next thing you need to do is put a face and a voice to the company. Hire a publicist and pick an executive, usually the CEO or CFO, set up, daily interviews on radio and TV to promote the company and as you do this you will begin to see instant results. Another thing is to send out articles and press releases focusing on every single positive point, contract and strategic partners, feed that publicity machine. Branding is another powerful aspect to raising capital. Make your brand and image something that people see on online and in magazines. A solid publicist will do wonders for you. Get your press releases going on the wire to broker dealers and market makers and other stock promoters.

Fund raising has been complicated by unethical companies that are looking to create capitalization angles for themselves whether they are the business raising capital or the broker dealer buying and selling their stock. Done honestly, there is no reason a company with a viable business concept can’t be successful in raising capital quickly and easily being sold on the public market.

Failure in Internet Business – Why? 10 Basic Principles You Should Know

Internet business is one of the fastest ways to make a profit on the internet and many scam artists know this as well. A search on the internet will return hundred of thousands of results for websites that either offer websites to buy or offer information on how to buy an internet business for the least amount of capital and obtain the best return on your investment. Internet research group Netcraft reported that there are now over 100 million Web sites on the Internet.

There are many different opportunities on the internet for an individual to earn an income and possibly change their life. If the individual has the drive and dedication to grow their business into a successful venture, then the internet provides the perfect arena for an individual to try and make it on their own with a minimum of expenditure. Whether you choose to buy website rights, purchase a turnkey internet business, or use affiliate marketing to earn an income on the internet, with a little hard work and determination you can make your dream a reality.

However, a recent survey says that only around 5% of all internet business people really successful in internet business. The clue is, there are at least ten basic internet marketing principles you should know:

Principle #1: It is about people, not computers

Regardless of the technology, it is still about people buying from people. Make sure your Web site and e-mail marketing talk to the person sitting behind the computer.

Principle #2: Find a market niche, not a wide spread

The Web is now much more competitive than ever before. The successful Internet marketers focus on a tightly defined, highly specialized niche market rather than trying to be all things to all people.

Principle #3: Build relationships, not transactions

All the money is in the customer, not in the first sale. Foster the long-term relationship with your customers, and they will keep coming back to you for more.

Principle #4: Friends, not strangers

Use the Internet to market to “friends” (existing clients and customers), rather than just looking to get new customers (“strangers”).

Principle # 5. Lead with expertise, not sales

People search the Internet looking for information. Give them the information first, before you launch into your sales pitch.

Principle #6: Generate leads, not sales

It’s tempting to think that you can do the entire sales process on your Web site, without any effort on your part. This is possible, but difficult. Use your Web site to generate a new lead for your business, and then take over to deal with the customer directly to make the sale.

Principle #7: Sell on value, not on cost

Your customers do not care how much it costs you to provide your products and services. They care about the value you provide.

Principle #8:. High margin, not high volume

Create product/service bundles that have high value and high profit margins, rather than trying to sell low-margin items to lots of customers.

Principle #9: Create intermediation, not transparency

There is so much information out there now that your customers are clamoring for experts to sift through it and deliver it in a way that provides meaning and value.

Principle #10: Market offline, not just online

The Internet is just another marketing tool. Do not rely on Internet marketing alone. Combine your on-line marketing with off-line marketing methods as well.

If you put any of these ideas into practice, it is very likely that you will be advancing rapidly in your Internet marketing.

How Much is Your Business Worth? (Basics of Valuation)

Ever wondered how external business consultants and valuation experts manage to attach a value to a business that you and your employees in most probability understand better? In a few weeks they come up with a price tag for a business that you have invested several years of your career in. Whether you are part of the operational team or the senior management within a company contemplating buying or selling business divisions (or the whole company), a basic understanding of the valuation process and the fundamental concepts involved, can make a huge difference while dealing with external (or for that matter internal) finance professionals.

Businesses can be complex creatures, dependent on and driven by a myriad of macro and micro parameters that can range across industry factors, competitive landscape, management quality, business cycle, regulatory environment and global dynamics. Conventional asset-heavy businesses can have very different characteristics when compared to modern asset-light service oriented businesses. Considering these differences, the valuation method employed has to take into account the most critical parameters applicable for the business and assign values accordingly.

Business consultants usually use a combination of valuation methods and the most common ones are described below.

Net Assets Value (NAV) Method

This is probably the simplest of all valuation methods as it depends on internally sourced data from within the company. And also possibly the least relevant for most businesses that are going-concerns. This is based on the net worth declared by the company and is heavily influenced by the accounting practices followed by the company. This method has several drawbacks, the most important being the fact that future earning potential of the business is completely ignored.

Comparable Company Multiples Method

The main assumption here is that data from recent transactions of companies operating in the same space is accessible and fairly reflects all parameters that characterise the business to be valued. Comparable company data could be derived from listed companies where stock prices are easily available or from past transactions where unlisted companies that were acquired. The challenge lies in identifying companies that are closest to the one being valued and for companies operating in niche industries, this can be a major hurdle.

Discounted Cash Flow (DCF) Method

The most sophisticated one among its peer group, this method relies on future earnings potential of the business. The final value is calculated as the present value of all future free cash flows – the key operative word here being ‘free cash flows’. Much of the effort within this method is spent on arriving at these free cash flows for each subsequent year over a time horizon (3-5-10 years depending on the nature and predictability of the business). A couple of other key words that you would encounter here include the Perpetuity Value and the Weighted Average Cost of Capital (WACC). The first one describes a lump-sum value (based on an assumed ‘perpetuity growth rate’ for the business) given to the business beyond the horizon period and the second term describing the value (in percentage) used to discount the free cash flows. The detailed workings tend to get a lot more complex as the valuation experts look at granular level data for the underlying financial parameters – sales, costs, working capital, tax structures, depreciation/ amortisation etc

A combination of these methods is used and weights assigned to each method depending on its relevance to the business and the industry. For instance, if comparable companies are difficult to identify, the CCM method will have a lower weight compared to the DCF method. The final value recommended for the business is a weighted average of all valuation methods considered for the company.

So, next time you bump into your friendly neighbourhood finance whizkid waxing eloquent on their latest valuation model, their cryptic sounding words will hopefully sound a little less intimidating.