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Last Update: Monday June 21, 2021

Key Idea: Find Others Who Believe In You

Hattie says that there is nothing better for owners than an enthusiastic and knowlegable fan club.

Key Question:

A: 

There may be plenty of people who would invest in you if offered them the right way to invest.

You have an idea that you think will work. You throw yourself into it. You are acquiring customers and taking care of them but only seeing sales slightly ahead of your expenses. You are in the forest and can't see the trees. When Brad Armstrong saw the Blue Whale movers in action, he was so impressed with their energy, professionalism, and work ethic; he got involved with the business.

Q: 
 When should you stop thinking year-to-year and start thinking strategically, i.e., long-range?

A:  When the tyranny of the short-term wears you down. This could be less than one year for some or 20 years for others. The artist/craftsman/professional who personally executes much of the service delivered to customers traditionally has an easier time managing cash-flow than does the business owner involved in manufacturing. So we see millions of very small, very profitable businesses who don't even consider looking for investors. However, with the world over-invested in big stocks and turning to small companies to diversify, all small business owners should consider what they could do with their current business if they had an infusion of cash with no accompanying debt service.

Q: 
 Why is David Porter enthusiastic about the SCOR?

A:  As a stock broker who tries to sell big publicly traded stocks to small business owners, he is constantly told, "I can make more return if I invest my money in my own business than if I invest in a big brand." He told us that over the long haul, an investor can expect 10-12% return on a big stock and that the venture capital firms look for at 27-30% return on their investments. An investment in a SCOR should return between 12% and 27%. David wants his customers to have a balanced portfolio which includes both big names and SCORs.

Think about it

Does your business impress your customers the way Blue Whale impressed Brad Armstrong? Do you have financial projections that indicate you could provide your investors that 12%-27% return that David Porter is looking to bring to his client investors?

Clip from: Small Corporate Offering Registration (SCOR)

Austin, Texas:  The Securities Exchange Commission (SEC) instrument known as Small Corporate Offering Registration (SCOR), sometimes referred to as Reg D Rule 504, is a little-known, but important tool for small businesses.

Mandated by Congress, every year since 1982 the SEC has held an annual meeting for small business investors and owners called "Small Business Capital Formation Conference."   The first result of that conference was the Reg D Rule 504.

In 1992, ten years later, Deborah Bortner, the Securities Administrator for the State of Washington, led the way to simplify the registration by developing the SCOR document.

At that time Congress wanted to help small business owner who have a difficult time finding money.  Another aspect of the SCOR is use it as a liquidity model that forces a business valuation. It could also be used as an exit strategy.  The majority of small business owners do not have a succession plan and a SCOR would necessitate that such a plan be implemented.

Historically, out of every $100 in banks loan, small business gets about $7. Though contributing over 50% of the Gross National Product,  working capital is often difficult to obtain.

The SCOR has not caught on. There is very little publicity about it and just a few educational resources. It does require three years of audited financials. It does involve your CPA and a good securities lawyer. 

The SCOR could be used in the following ways:  (1)  A cornerstone of a succession plan and liquidity model for mature small businesses, (2) An alternative to an employee-stock ownership program, (3) A means for all those who already want to buy into a business to do so without going through an IPO and without necessarily being a qualified investor, and (3) An instrument to provide a conservative diversification strategy for pension funds, mutual funds, and private investors.

Because of the ubiquity of the web, Small Business School will promote any and all attempts to develop  mechanisms so the best small businesses are indexed against one another and the best among the best rise to the top and are immediately qualified to be selected by any investor to receive equity capital.

It will change business in America forever.  Small business can share equity,  learn about liquidity models,  understand our financials and key critical ratios, and then participate in the market just like any big business.

Go to all the key ideas and videos of this episode...

Small Business School, Inc..

Bruce Camber,


214-801-8521

Visit our web site: http://SmallBusinessSchool.org

Office: 214-801-8521

Business Classification:
Education

Year Founded: 1994

Find Others Who Believe In You

HATTIE: (Voiceover) David Porter and David Pinkus founded the Texas Capital Access Forum. This group meets regularly, and was able to convince the Texas Legislature to provide insurance on up to $21 million invested by Texas in small business.

DAVID PINKUS: What I discovered was that there was a vacuum of anywhere from $50,000 to $25 million, where no one could go to to raise that capital unless it's an independent broker. But, really, that independent broker doesn't have the capacity. That's where the networking comes into play. What I'm trying to do is establish a network to do that in the future.

HATTIE: Which is why you're involved.

DAVID PINKUS. That's why I'm involved and working with all these brokers. Also, I'd like to be involved in working with other brokers to provide liquidity for these people who have made these investments. At some future date, they would like to get their money out.

Unidentified Man #1: (Voiceover) I represent a company called Whirligig and it's associated companies. Whirligig is an established company. It has done training programs on a build-to-suit basis; that is, for a particular client. It's now going into generic seller training for sellers of alcohol, teen training for abuse of alcohol, and then further down the line, food-handling programs, many of which are mandated by the Legislature in which we're having this interview. Raising money is just like any other business, it requires a great deal of skill, it requires a great deal of experience.

HATTIE: Does everybody need one of those cool hats to raise money with?

Man #1: No. No. It helps.

HATTIE: No, is that a part of the storytelling, though? Man #1: It helps.

HATTIE: You need a schtick.

Man #1: You need anything you can get to grab people's attention and make them remember you. That's something that small businesses need to learn. You've got to be remembered; you've got to stand out.

In the Studio

HATTIE: All of us are over invested in big business. It's time to think about the entrepreneurs in our own neighborhood, for two reasons. When our local companies grow, then our community gets better, and it's rewarding to watch your money up close. You see the deli owner or software developer at the Chamber of Commerce meeting or at the Little League games. We hope more companies start using a SCOR offering and we hope investors will put money into homegrown entrepreneurs.

HATTIE: (Voiceover) At Small Business School.org there is self-help study for people who want to start a business and for those who want to grow the business they have. From the home page choose Steps to Start or Steps To Grow. Next, you'll find 8 steps or stages of growth. At each step you'll find links to more resources. Also, from the home page you can choose Learn on Line for access to streaming video and interactive study guides.

(Voiceover) Jonathan Langley started TVPC in his garage, and he is already selling products from his Web site. His device turns your TV into a computer. Jonathan wanted to find out from David if TVPC is a good candidate for a Small Corporate Offering Registration.

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