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Key Idea: Use OPM To Build Beyond Yourself

Andy Wilson, founder of Boston Duck Tours, spent all of his own money and covers a million-plus dollar shortfall through a creative offering memorandum.

Key Question:

A: 

Andy Wilson went after investors.

Other People's Money should engender the same respect as your hard-earned cash. If you have big plans for growth and your business is sustainable beyond your involvements, and you are sure that you require a substantial infusion of cash to your business, consider equity financing. Equity financing means you are actually selling a portion of your business for a price based on what the value of the business will be after you use the proceeds from the sale of your stock to achieve your business plan.

Q:
What kind of equity financing is available to a small business owner?

A: As with bank financing, there are a variety of different sources of equity financing. Venture capitalists, angel investors, qualified investors, and the general public all invest in small businesses. To seek equity capital, you'll have to prepare some sort of offering memorandum. You are offering to sell your stock at a certain price. The offering memorandum will include your business plan, financial information, anticipated use of proceeds, and the risk factors to the investors. Both the form and content of offering documents are regulated by Federal and State securities laws.

Q: How does a small business obtain equity financing?

A: You will have to prepare a written document that tells your story effectively and in great detail. If you are successful, much of what you write may well be incorporated in an offering document.

Get working on that document, and begin weighing the "costs" of each type of equity partner. All but the SEC's SCOR, a private placement memorandum, requires what are known as qualified investors. The most expensive is the initial public offering on a securities exchange like the NYSE (Wall Street) or the NASDAQ.

It all depends on how much money you need and how the stock in your company will be marketed. Whether or not you will be successful is dependent on the soundness of your business idea, the strength of your management team, the size of the target market and your ability to capture that market, the all important numbers and potential return on investment, and, of course, the risk factors. If you believe you can excel in each of these areas and you pound on enough doors and make enough telephone calls, you will find the OPM you need.

Think about it

Do you have big plans that require big bucks to turn your dream into a reality? Could you give up part of your business to make that happen?

Clip from: Money: All about Financing Your Business

Silicon Valley, New York City, Sydney and the World:   When you are just  starting, it is usually about your money, called MOM, an acronym for My Own Money. It is also called "skin in the game."  Very few of us have a track record and can write a business plan that is so compelling that we begin with Other People's Money (OPM).

If you are growing, there is an abundance of stagnant capital that may be looking just for you.  Qualified investors (and people who believe in you) are looking for ways to grow their money either as a loan or as an investment for equity. It will require an excellent business concept, a well-detailed business plan (your story), and real financial projections. They will also require that you understand your financials, even if they are quite modest. Those numbers are the organics of a business, the basic 1-2-3s.

Business is just a series of problem-solving exercises. That's its nature.  If you do not have the stomach for it, get a job. If you think money is going to be given to you just because you have a good idea, keep your job!

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Boston Duck Tours

Cindy Brown, CEO (Andy Wilson, founder)

3 Copely Place
Suite 310
Boston, MA 02116
6172673825

Visit our web site: http://bostonducktours.com

Office: 6172673825

Business Classification:
Entertainment / education

Year Founded: 1994

Use OPM To Build Beyond Yourself

Meet Andy Wilson
ANDY WILSON: (Voiceover) There we go with a big splash.

HATTIE: When Andy Wilson was broke from investing every penny he had into his Boston Duck Tour launch, he was still a million dollars short, so he went looking for venture funding.

ANDY: I was desperate, you know, and I tried to get bank financing, and I tried to go to the SBA, you know, all that stuff--was gone. So in last desperation, I made phone calls. So I finally got a hold of this woman and--through a partner at an accounting firm, because I called him desperately.

I said, `You've got to help me find--.' He says, `Her name is Carrie McIndoe.' And he says,` Her name's all about what she is, Carrie 'Mac Can Do.''

I called my mom up, and I said--because I was broke--I said, `I need to borrow some money to fly some people out so I can get to the last step,' and that was in June, and by August, they had raised the money for me, $1 1/4 million.

And, you know, they had the contacts, I had the offering memorandum...

HATTIE: So explain to me an offering memorandum. What is it?

ANDY: An offering memorandum is a legal document that explains your business idea, how you're gonna execute it, your financial projections, the legal structure and it does it in such a way--and it also discloses all the risks. In other words, there are inherent risks in any business, you know.

I feel like a farmer. One of the risks was the weather. If it rained for an entire season, I'd go bankrupt, you know. So I had the logo on the front of my offering memorandum. You know, it's a big, thick book.

HATTIE: The little duck?

ANDY: And when I first showed her this, I showed her a picture of the skyline views from the Charles, and she says, `Andy, you're all wrong. It's not the logo.' And she put the picture of the views right here of Boston on the front of the thing.

And I was just telling you about these investors in Maryland.

I'd been going around because I'd never met half these people. And I said, `Why did you invest?' And they said, `We liked the idea, and we saw that picture on the front of the offering memorandum, and we were sold.'

He said, `We knew it would work.'

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