

              A business selling securities through an underwriter or
         other professional selling agent can count on the selling
         agent to use its experience to check all of the issues
         which investors will typically wish to see addressed before
         they are willing to invest.  An experienced selling agent
         has been through the offering procedure many times before
         and, because it knows that the business will get only one
         try (because a shop-worn deal will not sell) it will be
         unwilling to "try and see what happens" (a common approach
         by an inexperienced business) unless every issue is
         properly addressed beforehand and adequate disclosure made
         in the disclosure document.  A company attempting to sell
         an offering itself usually does not exert proper discipline
         upon itself on this point, and most do-it-yourself selling
         efforts fail primarily for this reason.

              Remarkably, the issues that are not properly addressed,
         irrespective of the company or industry, are almost always
         the same.  There are good psychological reasons for this.
         These issues are listed below in the order of importance.

               Inexperienced Management Team

               Usually in small business offerings scrutiny
          reveals that the management team does not have sufficient
          past experience in (a) managing a small business
          successfully (this means having been in charge and making
          the critical decisions properly), (w) marketing in the
          specific industry in which the company operate or intends
          to operate (and thus does not already have established
          customer contacts that he or she will be able to draw on),
          (3) manufacturing or rendering of services within the
          specific industry, and (4) accounting, budgeting, and cost
          control techniques.  If the company does not have a
          management team with adequate experience in these areas, it
          does not mean that the offering should be abandoned.  It
          merely means that a management team with the proper
          experience must be assembled before proceeding.  It is not
          necessary that all members of the management team be
          full-time employees, but they must be willing to commit
          adequate time to the company and be properly motivated.
          This usually requires employment agreements with
          covenants-not-to-compete and stock options.  There must
          also be adequate assurance that by working with the company
          the members of the management team will not be in breach of
          covenants-not-to-compete or confidentiality agreements with
          former or existing employees or be improperly using
          proprietary information belonging to others.  If there is a
          question, a release or consent is necessary.

              Remember:  A knowledgeable investor will not let an
          entrepreneur learn on his or her money by trial and error,
          nor risk that his or her money will be used up in a lawsuit
          over trade secrets with a former employer rather than be
          used in running the business.  In general, investors, are a
          lot smarter than entrepreneurs may think and often talk
          among themselves when assessing whether or not to invest.

              Securities Offered Are Priced Too High

              An entrepreneur who has developed a detailed
          business plan and addressed every major issue
          satisfactorily, and has checked all of the issues numerous
          times with built-in contingencies, usually is convinced
          that this particular business cannot (or is not likely to)
          fail and because of its high potential is worth a great
          deal of money.  The "can be" of the project in the eyes of
          the visionary entrepreneur becomes an "is" -- except for
          the money, of course, which the investors will provide.
          The result is (usually substantial) overpricing of the
          offering, which is fatal.  Once shopped after overpricing,
          the deal cannot be repriced and sold, as investors do not
          want to reconsider once they have made up their minds.
          Remember:  Public investors do not negotiate; they just say
          "no."  Once they say "no", that's it.  If the entrepreneur
          lowers the price substantially, that only confirms to the
          investors that the entrepreneur does not know what he or
          she is doing, and the investors will want no part of it.

              Overpricing is an almost universal phenomenon among
          entrepreneurs.  If they did not "believe in" their company
          (almost to the point of being an act of faith) they would
          never have undertaken the risks associated with having
          become entrepreneurs.  It is inherent in the circumstances.

              Professional selling agents know (having learned
          the hard way) that investors usually do not care whether a
          company promises a fair or even a good return.  The
          investors care only whether the return promises to be as
          good as other alternative investments of similar risk.  And
          all small business investments must have high potential to
          sell at all.  Few entrepreneurs readily have a good grasp
          of what alternative investments are available to investors
          at a given time.  Entrepreneurs usually think, "my company
          is as good as X Company, and it sold its securities,"
          without fully appreciating the differences in risk and the
          efforts required to sell X Company's securities.  Also,
          investor moods change with the markets and the economy, and
          what sells at one time cannot necessarily be sold a few
          months (or weeks) later.

              When an underwriter is particularly realistic
          ("tough") in price negotiations, the entrepreneur complains
          that the selling agent "does not believe in the company" or
          "cannot see the company's vision."  This may or may not be
          true but it is not the right question.  The relevant
          question is whether the selling agent can convince an
          adequate number of investors to "believe in" the company
          more than in some other company.  When the selling agent
          through experience knows the price is too high, it can
          refuse to undertake a marketing effort unless the price is
          lowered to a saleable level.  This is a practical check and
          balance to the visionary approach to value of the
          entrepreneur which does not exist if the company markets
          the securities itself.

              The dilemma for a company selling securities
          without a selling agent is that unless the company can
          accurately determine what the proper pricing level is, it
          cannot exercise the required self-discipline to adopt that
          price and proceed with the offering.  There is no clear
          solution.  An appraisal may be helpful, but appraisers
          usually work from forecasts that management develops, and
          these forecasts are almost always too optimistic as to how
          quickly and at what cost the company will be able to
          generate substantial revenue and earnings streams.  An
          appraiser that is too critical of management's figures is
          apt to be fired or ignored, and there is thus substantial
          pressure on appraisers to be on the high side in their
          appraisals.  Although high figures may be pleasing to
          management, they defeat the purpose of preventing
          overpricing, and the appraiser knows full well that it is
          highly unlikely that management will ever criticize the
          appraiser for bringing in a high figure, even if the
          offering does not sell.

              Notwithstanding all this, there is nothing more
          helpful in pricing an offering than a careful appraisal
          based upon realistic projections and risk assessment.
          Because there is such a variance in the quality of
          appraisers, it is generally advisable to engage one that is
          a member of the American Society of Appraisers.  Also, most
          appraisers will provide a range of values, and it is not
          always the best procedure to pick the highest price in the
          range.  The object is to sell the offering successfully.

              One thing must be kept in mind about appraisals
          used in pricing public securities offerings, and this is
          that the investors may not be advised of the existence of
          the appraisal -- neither in the disclosure document nor
          orally.  This is a regulatory requirement that must be
          strictly observed or serious consequences could result.
          The only exception is in negotiating the price with a
          lead investor, discussed below.  Perhaps the best approach
          in establishing an offering price is to approach privately
          a substantial knowledgeable investor to be a lead investor
          in the offering and convince him or her to analyze the
          company and indicate a willingness to invest substantially
          in the offering at a negotiated price.  Then the
          entrepreneur should use precisely the same price for all
          investors in the offering.  Such a negotiated pricing
          procedure will prevent overpricing.  An appraisal may be
          quite helpful in negotiations with a lead investor to
          establish the offering price.  As noted below, the use of a
          lead investor can also be the primary marketing device
          in a do-it-yourself offering because there is no better way
          to lend credibility to an offering.  But the entrepreneur
          should be careful -- the lead investor must (a) invest in
          the offering at the same time as everyone else, not before,
          and be subject to the same impoundment arrangements in the
          offering until the minimum is realized, (2) not have
          invested in the company previously or be an officer,
          director or employee, or a relative or affiliate of any
          such, (3) be a sophisticated business person and be
          recognized as such, (4) invest a significant amount in the
          offering (at least $25,000), and (5) not receive any
          special price, concession, reimbursement of expenses,
          options or service contract with the company.


              Structure the Offering So That Insiders Cannot
              Realize on the Success of the Company Before the
              Investors Do.

              Most offerings do not use this type of structuring,
          and as a result potential investors frequently have a fear
          of being taken advantage of and do not invest.

              One fear is that the insiders will pay the proceeds
          from the offering and any earnings to themselves in the
          form of inflated salaries.  Verbal assurances do not work;
          only structural prohibitions do.  One approach is to
          establish modest salaries for the principals and prohibit
          any other compensation (except salary increases based upon
          the Consumer Price Index) unless and until there is
          established a liquid trading market for the company's
          shares, until the company is sold or merged for cash or
          marketable securities, or until the investor's securities
          are redeemed.

              To assure that management moves the company
          ultimately toward some kind of investor liquidity,
          incentives toward that end may also be included in the
          structuring.

              There may also be some sort of preference to the
          investors over the founding shareholders in the event of a
          reversal in the company's fortunes to reduce the downside
          risk to investors.  An appropriate security to use would be
          a convertible preference stock without a stated dividend
          rate.  If the company is successful, the securities can be
          converted into common stock.  If the company goes into
          receivership, the investor is paid from available assets
          ahead of common stockholders.

              Companies that use some kind of structuring along
          these lines have an advantage in selling their securities
          over those that do not.  Properly addressing these issues,
          which are often troublesome to investors, increases
          (usually substantially) the chances that the offering will
          be successful.  Good structuring provides investors comfort
          and makes it more difficult for an investor to "just say
          no."

              Inclusion of proper structuring requires
          substantial self-discipline on the part of the management
          of companies seeking a do-it-yourself offering.  There is a
          temptation to "fudge," particularly on management
          compensation restrictions, which weakens the offering and
          sets it up for failure.


              Inadequate Market Analysis For Company's Product

              Even experienced marketing persons often
          underestimate the time and resources needed for a small
          business to penetrate a market or (worse yet) create a
          market for a company's product. cynical investors can often
          sense the weakness of an inadequate market analysis, and
          the offering will be difficult to market as a result.  Even
          if established distributors can be tapped, market
          acceptance for most new products takes time and effort,
          even with superior incentives in the distribution chain.
          Investors with exposure to marketing will often
          instinctively react cautiously to aggressive marketing
          analyses, and assurances that "the figures are
          conservative" will only make them more ill at ease.

              Plan For The Offering As A Major, Full-Time Project

              Many entrepreneurs assume that they will be able to
          raise capital for a company in addition to continuing their
          regular full-time responsibilities in the company's
          operations.  However, raising money is a major project for
          a small business and, because raising capital from the
          public is often unfamiliar, is often more difficult and
          time-consuming than conducting the business operations
          themselves.  the offering must be given highest priority in
          resources and staffing.  There must be unfettered
          availability of officers and secretaries for six months or
          so, at a minimum.  If this kind of commitment cannot be
          achieved, the offering will likely fail.  Failure to devote
          adequate effort a the outset is a major factor in most
          unsuccessful offerings.  To give the offering proper
          support, financial resources are needed, and if they are
          not available, the chances that the offering will succeed
          are slim.  There is a tendency for entrepreneurs who
          "believe they can do anything they really want to do" to
          proceed without adequate resources and fail to capitalize
          their company after expenditure of much time and
          substantial (although inadequate) funds.

              Small business offerings take six to nine months
          (and often a year) after the permit has been granted by the
          state securities regulators, and failure to budget for a
          full-time effort during this period will probably result in
          failure.  In this regard, it should be remembered that the
          company does not stand still during the course of an
          extended offering, and to the extent that material events
          have transpired (such as, for example, the breaking of
          impound by reaching the minimum sales level in the
          offering, or preparing of the financial statements for the
          end of a fiscal quarter) they should be described in a
          supplement to the disclosure document and furnished to new
          investors after clearance with the securities commissioners
          of the states involved.  If very substantial changes have
          occurred before the minimum offering amount has been sold,
          it may be necessary to amend the disclosure document and
          use it to obtain a confirmation of the investment from
          the investors whose funds have been placed in impound.


              Use Investor Meetings To Communicate The Company's
              Story

              The selling approach envisioned by the states that
          have adopted SCOR is use of investor meetings as an
          efficient method of communicating to investors the
          background and potential of the company.  The amounts sold
          to small business investors is typically too small in each
          individual case to raise adequate amounts by telling the
          whole company story to each investor separately.  Thus, the
          usual telephone-only approach to investors used by many
          brokers will not work in the typical do-it-yourself
          offering.  Now will individual personal visits.  Investors
          must be assembled at a meeting where the officers of the
          company personally tell the company's story and there is a
          chance for dialogue and questions.  Visual presentations
          can be made and samples of the company's products can be
          displayed.  A really convincing "dog and pony show" must be
          developed.  The formal presentation should last for no more
          than an hour -- preferably 45 minutes.  The CEO should be
          the primary speaker, with the CFO presenting the financial
          information, including the budget and analysis.  At the
          beginning of the meeting copies of the disclosure document
          should be distributed.

              After the formal presentation there should be a
          question-and-answer session.  This would be the appropriate
          time for the lead investor to indicate to the meeting the
          reasons for his or her investment, including any due
          diligence he or she may have done.  this will give comfort
          and credibility to the offering and will probably be a
          primary motivation to many investors to invest.  The lead
          investor should be given an opportunity to speak and should
          indicate his or her experience in reviewing other
          investments and why he or she has chosen to invest in the
          company.  A statement by a lead investor that he or she has
          seen a lot of investments, has done due diligence on this
          one, believes this investment to be a good one, and is
          putting $25,000 (or some other significant amount) into the
          company is perhaps the best way for the offering to obtain
          credibility.  A proper presentation along these lines will
          precipitate investments by others, particularly if the lead
          investor is known and respected in the community.  The fact
          that the lead investor is investing can be referred to in
          follow-up calls to potential investors, but only if the
          lead investor has paid his or her investment into the
          impound -- otherwise any such representation might
          constitute securities fraud.  A lead investor should be
          invited to participate in each meeting.

              There should be investor meetings in each major
          population are where the company is making a sales effort.

              Some companies approach the process with an almost
          party-like atmosphere.  The investor meetings are
          breakfast, lunch or dinner meetings, perhaps with cocktails
          or some special food.  There are samples of the company's
          products or souvenir mugs, T-shirts, pencils or caps handed
          out or used as door prizes.  The presentations use videos,
          graphics, slides and an interesting -- almost entertaining
          (although serious) -- presentation.  Attendees are treated
          cordially (almost deferentially) and are "charmed" by the
          company's management, who tires to learn something personal
          about each attendee's background before they arrive, to the
          extent possible.  the meetings are upbeat and involve
          spouses (and sometimes children) so that an investment
          becomes a family commitment.

              Other companies approach these meetings on a
          strictly business basis, with the emphasis on the potential
          of the company for success.  Under this approach, special
          emphasis is made upon figures and graphs to show the
          viability of the market analysis and the business plan.

              The approach chosen will depend upon the nature of
          the company's business and the styles of its management.
          Irrespective of the style used at the meeting, enough of
          the nature of the meeting must be disclosed in a favorable
          manner to induce investors to attend.  These can range from
          seminars on learning the successful techniques of small
          business investing to a tour boat outing with hors
          d'oeuvres and cocktails with the company presentation being
          given during the cruise.  Imaginative marketing personnel
          can come up with even more intriguing approaches to induce
          attendance.

              A few words of caution, however:  The inducement
          should not be false or management's integrity will be put
          into question and the offering will lose credibility.  It
          is important in all cases to indicate that a company's
          presentation will be given at the meeting, so that
          attendees will not be misled as to what the meeting is
          about.  Otherwise there will not only be a credibility
          problem, there will be a regulatory one as well, and some
          potential investors will probably become irritated and
          complain to regulators.  It is not necessary, however, to
          name the company in the invitation to the meeting as long
          as a presentation by some company is disclosed.

              If cocktails or wine are served, no subscriptions
          should be accepted at this meeting, as the investors might
          have an unanticipated right of rescission against the
          company's management.  In this circumstance, "closing"
          solicitations should be made a day or two later on a
          one-to-one basis by telephone or (better yet) in person.
          Because once a meeting begins to move successfully, it is
          usually desirable to get a commitment (subscription) right
          then and there, it may be a better strategy to substitute
          an espresso bar for cocktails -- and this might be more
          cost-effective also.

              A few observations concerning the distribution of
          the company's products or souvenirs to potential investors:
          The object is to generate interest in and loyalty to the
          company.  If the company manufactures a low-value consumer
          product that is attractive and interesting, then
          distribution to potential investors of samples of the
          product would be effective in communicating what the
          company does and in allowing vicarious "participation" in
          the company by the potential investors.  If the company's
          business does not lend itself to this, inexpensive but
          attractive souvenirs, such as mugs, T-shirts, pencils, and
          caps bearing the company's logo, might be effective in
          causing potential investors to identify with the company.
          There is of course, an issue of the attractiveness of the
          items and whether they are appropriate and in good taste,
          but this issue should not turn on cost or value.

              Any use of expensive items, whether products,
          souvenirs, or gifts, are apt to be viewed by potential
          investors as an attempt to manipulate them and will run a
          high risk of offending rather than enticing.  Use of such
          items will be counterproductive and could create regulatory
          problems.  Any use of expensive (or, worse yet, apparently
          expensive) gifts or door prizes to entice persons to attend
          meetings (by requiring that they attend to receive the gift
          or price) is extremely negative and may likely raise
          inquiries by regulators.  Furthermore, even if persons
          invest, they are likely to feel manipulated by such
          enticements and may be a problem if the company does not
          perform as expected -- which happens most of the time.
          Should a complaint by a regulator or a disgruntled investor
          be litigated, introduction of evidence that valuable gifts
          or door prizes were used to lure persons to a meeting could
          be highly detrimental because of the way the inducements
          might be viewed in a courtroom atmosphere.  (This has been
          an approach used by many time-share firms, and their
          efforts have been met with substantial regulatory and
          judicial hostility -- which has put many of them out of
          business.)


              Tell The Company's Story Concisely And In An
                  Interesting And Balanced Fashion At The Meeting

              The company cannot tell a good story if the company
          does not have a good story to tell -- unless, of course, it
          commits securities fraud.  In essence, the company must
          start with a "good deal."  If the company cannot present a
          good deal, it should not start.  Remember, an entrepreneur
          often believes his or her offering to be a good deal when
          indeed it will be perceived by potential investors as a
          poor one, if not a "rip-off."  Management should discuss
          the offering with knowledgeable small business consultants
          and accountants and request a frank opinion.  Usually the
          offering is not a good one until the entrepreneur believes
          (1) it can't miss and (2) he or she is giving the company
          away.  If the entrepreneur has in the back of his or her
          mind that he or she will somehow be able to "put one over"
          on public investors, he or she should spare himself or
          herself the agony of proceeding further with the offering.
          Remember that public investors are much smarter than most
          entrepreneurs think.  Remember also that, although some
          offerings can be enhanced by "getting your act together"
          through structuring and pricing, an inherently flawed
          business venture cannot be turned into a good deal in this
          manner.  If the economic value is not there (usually
          reflected in the gross margins, which should be capable of
          being protected in some way) then the deal should never be
          done and the offering not pursued.

              A good deal properly presented will sell.  A bad
          deal will not sell (and should not).  The disclosure on the
          securities form is too exquisite to allow an entrepreneur
          to pass off a bad deal for a good one.

              Persons attending an investors meeting should be
          asked at the door to register in a guest book by providing
          their name, address and telephone number.  This registry
          should be used in subsequent sales calls made by telephone
          or in person (or both).

              The presentation at the investors meeting has been
          discussed in connection with other points covered in this
          chapter.  A typical format would be as follows:

              A.  A consultant or other persons discusses the
          investment strategies associated with small business
          investments ("statistically, most small businesses fail;
          don't invest what you can't lose and diversify; hope that a
          big winner or two will make up for all losers.")

              B.  The CEO summarizes the company's historical
          operations, the budget and milestone analysis.  (The
          milestone analysis must be explained not as what is most
          likely to happen but to show what would happen under
          several different scenarios, including what sort of
          retrenchment would be expected to occur if primary
          milestones are missed or their achievement delayed.)

              D.  There should be a question-and-answer period
          during which the lead investor can address the assembly
          from the audience and explain why he or she is investing in
          the company.

              E.  There should be an express invitation for
          persons to invest and a detailed explanation of how to do
          so.

              In many ways, management needs to "charm" attendees
          into investing as much as to convince them intellectually.
          Whether or not a persons invests usually depends as much
          upon whether he or she "trusts" the company's management as
          it does upon whether the deal appears to be a good one.
          Let's face it, all deals will look good.  The real question
          is whether or not they are credible.

              Management should being at the outset to establish
          credibility with the attendees.  Management should hand out
          copies of the disclosure document early in the meeting.
          Management should not exaggerate either in the disclosure
          document or in the oral presentation at the meeting.
          Investors are extremely sensitive to exaggeration and if
          they think management is doing so, they will be turned off
          immediately.  Management should make sure all key issues
          have been covered thoroughly so that the company "has its
          act together," as described above.  Beware of telling the
          company's story in a way that is different from what the
          official disclosure document says.  If there is a
          discrepancy, the investors may believe the company is
          trying to "pull something."  If there have been material
          events that have transpired since the effective date of the
          disclosure document, update the written disclosures by
          supplement or amendment to the disclosure document before
          proceeding.

              The use of videos, slide shows and other visual and
          audio aids at meeting for potential investors should be
          analyzed carefully.  The object of visual and audio aids is
          to inform in an interesting manner, and if such aids become
          merely entertaining they may be viewed as "slick" and
          manipulative and cause potential investors to become
          skeptical of an otherwise attractive company.  Visual and
          audio aids must be relevant to the central issues of the
          company's business; otherwise, there may be concern that
          either management is unable to identify and focus on the
          central issues or that the audience is being manipulated.
          Avoid loud or inappropriate music, crooner-voiced
          announcers or other media-oriented presentations, unless of
          course the company is a media-related company and such a
          presentation is a demonstration of some aspect of the
          company's business (in which case the presentation should
          be identified as such).  A straight-forward use of picture
          and product samples is highly desirable.  Audio
          presentations may be more or less relevant depending on the
          company's business and operations.  Usually a personal oral
          presentation by management at the meeting is preferable to
          a recorded audio presentation.  A visual or audio joke or
          two may be entertaining but should not be too distracting;
          such a joke would be quite positive if it could be used to
          emphasize a key point concerning the company's business.

              The used of visual and audio aids requires clear
          judgment and discretion on the part of management.  This is
          especially important when a meeting for potential investors
          is combined with some other event to attract attendees to
          the meeting, particularly if the other event is primarily
          an entertainment of some sort.  In such circumstances, the
          company's presentation should be kept separate and distinct
          from the other event.  this may be a delicate balance, but
          can represent the difference between credibility and
          skepticism toward the offering under many circumstances.

              In general, management should treat meeting
          attendees fairly and with respect because if they become
          investors, in all likelihood management is going to have a
          long relationship with them.  Management wants them to be
          the company's sympathetic and patient supporters.
          Exaggerated promises and the creation of unrealistic
          expectations are invitations for disaster.  the company is
          statistically likely to get into unforeseen trouble
          irrespective of its prospects, and the company is thus
          likely to need its investors even more in times of such
          stress than it does at the time of the initial investment.
          At such times investors can either come to the rescue or
          make trouble, and what reactions a company receives is
          largely a function of its own handling of the matter rather
          than some inherent beneficent or perverse nature of the
          collective personalities of its investors.

              Whether the company is immediately successful or
          gets into trouble, there are almost always additional
          rounds of financing -- usually two or three more.  If a
          superior job if investor relations has been undertaken, the
          company's investors can be the base from which additional
          rounds of financing spring.  Thus, properly cultivated, a
          company's investors can be a primary resource to the
          company and should be nurtured and jealously guarded.
          Never furnish your investor list to another company seeking
          funds.  You want your investors ready, willing, and liquid
          when you need them.  This may not be so if your investors'
          resources are also being used to fund other companies.

              The primary lesson is to keep investors fully
          informed at all times by quarterly (maybe even monthly)
          status reports.  These do not need to be all good news but
          they must be at all times accurate and not misleading.
          Entrepreneurs should think of investors not as greedy
          strangers to whom the entrepreneur must constantly brag or
          justify the investment, but rather as friend with whom the
          entrepreneurs are sharing the ups and downs of the business
          because the investors are part of it.  The entrepreneurs
          should allow the investors to experience the fun and the
          disappointments with the entrepreneurs.  for many persons
          who invest in small businesses these psychic rewards can be
          as important as the expected monetary return.
          Entrepreneurs should resist the urge to show how smart or
          accomplished they are by emphasizing the successes and
          minimizing the setbacks.  They should make their investors
          root for them and be a source of unofficial support with
          customers and suppliers.  The next time the company raises
          capital, the entrepreneurs will want the company's existing
          investors to get their friends involved because they
          themselves have been involved and believe it is important
          and (hopefully) fun for them.

              Entrepreneurs cannot have an attitude of exploiting
          their investors and pull this off.  Potential investors
          will see right through this and not invest, and if they do
          invest they will be a source of trouble rather than
          support.  Entrepreneurs should not accept persons who
          should not invest, or funds that should not be invested, in
          a small business.  Ineligible persons include the elderly,
          retired persons on fixed incomes, and anyone else without a
          full-time job.  Entrepreneurs should have a sense of
          whether the investor can afford to tie the funds up
          indefinitely or perhaps lose them all without hardship.  If
          funds that are needed for retirement, college education,
          medial expenses or living expenses are used, the investor
          is apt to reach a state of dire need that will cause him or
          her to put pressure on the company to buy him or her out,
          to liquidate or to sell out -- and usually none of these is
          feasible for the company when the investor's need occurs.
          Depending upon the temperament and number of investors, and
          the amounts involved, this can spell trouble for the
          company should the investors consult an aggressive lawyer.

              The persons attending an investors meeting are the
          best candidates for investment in the company and should be
          respectfully and assertively followed up and "charmed" into
          investing.  Management should tell them how much management
          would personally like to have them be a part of the
          company.  Management should invite investors to subsequent
          meetings seeking investors and have them speak as to why
          they have invested.  Management should invite persons who
          have attended meetings but have not invested to
          shareholders meetings so that they can become involved and
          become investors.  Some meetings should be social as well
          as business affairs.  Spouses should be asked to attend --
          even children on occasion.  When appropriate, a
          shareholders meeting should be an outing.  Entrepreneurs
          should not make these meetings expensive or elaborate, or
          they will foster fears that they do not have good
          discipline for cost control.  Simple, frugal get-togethers
          to discuss the business and to socialize are good.

              In follow-up telephone conversations and meetings
          entrepreneurs should indicate (if true) that certain of the
          attendees' friends have invested so that they will not feel
          they are taking a lone step which their friends will
          criticize.  (Entrepreneurs should not represent that
          friends have invested if they have not done so -- at best
          the entrepreneurs will lose credibility, and such false
          statements may well be deemed securities fraud.)

              If necessary, entrepreneurs should ask for a
          specific amount if they notice hesitations as to how much
          to invest -- e.g., "Your friend John Smith has bought 1,000
          shares; why don't you do the same?  That's $5,000, and you
          need not actually pay funds into escrow for a few weeks
          yet.  Talk it over with Alice and I'll check back next
          week."

              Management should follow up multiple times, with
          courtesy and grace.  Management should persist in good
          humor, but should persist.  Some busy persons will invest
          just to get rid of persistent management.  In this regard,
          the decision to invest in a small business is not one that
          many people address very often.  A substantial amount of
          money is involved and the chances are good that it will be
          lost.  Couples may be foregoing a vacation or a new "toy"
          to invest.  This can be a stressful decision and not one
          that thoughtful people make lightly.  They will come right
          to the brink and then not decide, or decide and then change
          their minds.  often there will be a difference in attitude
          between souses.  (For this reason, entrepreneurs should
          talk with both spouses whenever possible.  In this regard,
          in every such sale, two sales may in reality be involved.
          It is particularly important to have both spouses committed
          over the long run to reduce the "I told you sos" if the
          company develops problems.)

              For these reasons, decisions to invest often take
          time, and gentle, friendly persistence is needed.
          Management should not use high-pressure sales tactics.
          This will create anxiety and be counter productive.  The
          mental process (subconscious) will be "if this deal is so
          good, why does he or she need to use high pressure tactics
          to rush me into it without more deliberation -- there must
          be something wrong!"  If high pressure results in a sale
          and the company later runs into trouble, the recollection
          that high-pressure sales tactics were used will cause
          investors to convince them selves that the management knew
          something was wrong and intentionally duped them.

              Management should persist and not give up.  Be a
          "pleasant pest."  Management should make the investors feel
          good about being part of the company. It helps if investors
          feel comfortable with the other shareholders and a socially
          compatible.  Of course, social contacts between
          shareholders can spell trouble if shareholders turn
          unhappy, as they can get together and gang up on
          management.  Management should make it clear that it cannot
          guarantee the company's success but can guarantee
          management's efforts and integrity.

              A company normally should undertake a public
          securities offering directly only after it has tried
          unsuccessfully to engage a professional brokerage firm to
          act as selling agent.  A do-it-yourself securities offering
          is a major project and must be approached as such from both
          a staffing and a budget point of view.  Many dynamic small
          companies find themselves continuously in a securities
          offering, with only pauses of a month or so once a year
          between offerings to revise disclosures and reprice. Direct
          placements of securities can be accomplished without
          selling agents but not without sacrifice and
          self-discipline.  Most companies substantially
          underestimate the magnitude of the work involved.  With a
          realistic assessment of the difficulty involved, a good
          deal properly structured can raise substantial amounts of
          capital from public investors.  An unattractive company, or
          a poorly structured offering, will (and should) fail.

