This is a stock offering but one that differs considerably from the well known IPO (initial public offering) or venture capital or other forms of early stage financing. It combines elements of these techniques but adds a dimension that can be very powerful for you. DPOs are often used to secure clients, employees, suppliers or distributors as an added arm for your success while giving you the cash you need to grow. DPOs are registered security offerings with state security administrators. They involve simpler procedures and far less cost than a full registration with the SEC. Essentially, they allow small business equal access to the capital markets that are enjoyed by their big corporate brothers and sisters.

Conventional thinking in terms of business development, in financing, or in marketing, all pay very poor dividends today. Competition is just too tough. The use of a DPO can be the novel approach that gives you the capital you need while simultaneously marketing your product or services. A restaurant that sells stock to its customers is an example of a DPO. A smaller bank that has depositors and borrowers alike that own stock is often a DPO. When people are involved with you economically, an "affinity group," they become your loyal and helping supporters. DPOs have been used successfully for pure start-ups as well as firms that had existed and been privately financed for decades.

Over the last 15 years, Fortune 500 companies have reduced their workforce from 16 million to five million. Over the same time period, small business has added 20 million new jobs. They have done that with less than 1% of publicly traded equity capital, It is obvious that if this creative force had the money, they could propel the economy forward in spectacular fashion. The SEC has developed a hands-off approach for much of small business stock offerings, preferring that regulatory responsibility he principally with the states. As more people learn about and successfully use a DPO, this type of financing could become a favorite for emerging, high-growth American businesses.

DPOs generally fall under three regulatory classifications, Regulation D Section 504 of the Securities Act of 1933 has become the most widely known, called the "Small Corporate Offering Registration" or "SCOR." SCOR allows you to raise up to $1 million every twelve months, by registration with state securities administrations. Next, a Regulation A offering extends that size to $5 million, but also requires a registration with the Small Business Office of the SEC. Finally, intrastate offerings typically have no ceiling. Variations of these three exist as well with even more legal choices, but you'll generally find your needs filled with one of these options. Your attorney or possibly the office of your state security commission can point out advantages and disadvantages, and a free booklet is available from the SEC.

Direct Public Offering (DPO) Advantages

• By selling stock, raising equity, you have capital that you never have to pay back, such as a loan. Also, you don't have the continual need to meet interest and principal payments, or worry that a loan may be called back in,

• Typically, you'll surrender a smaller portion of equity for the same amount of capital than required by venture capitalists or even private placements. The difference lies in the stock market, where valuations are usually far higher than in non-public transactions.

• Undergoing this process gives you the experience with investment banking and shareholders long before you conduct an IPO. You'll know just what your stock can sell for and avoid much of the guesswork that goes into marketing a security.

• DPO sales involve extensive publicity campaigns unlike any other financing. This is a perfect opportunity for potential customers to find out about your company and its products. Money used in selling the stock does double-duty, it simultaneously extends your marketing.

• You can typically "test the waters" by making preliminary inquiries and advertising a potential stock sale. You can find out a lot before going through the expense and effort of a full-blown effort.

• The involvement of employees, suppliers, distributors and customers with your company all becomes more intensive and lasting when these people are economically motivated to see you succeed. Help can come in so many unexpected ways when you decide to open your vision and some of your profits to others.

• Equity capital can be magic for opening other financing doors and leveraging your company for years to come, Bank loans can be made on a secure basis when the risk has already been thrown off to investors who can sustain it. Government grants and loans, bond offerings, and even venture capital can be more attainable if you've reduced the risk of investing with you.

• By going these extra steps, both you and your company become seasoned prospects and can take a product or service more extensively into a market. By demonstrating that your stock can be sold and your company has a growing market presence, you show the management characteristics that investment money is looking for.

By successfully becoming a publicly-held company, you'll have a formula for future financing and even new companies. One successful entrepreneur using a DPO has financed more than a dozen.