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Reader-to-reader advice.

By Inc. staff | 
 

Prospectus Perspectives
I need to write a prospectus for a small corporate offering (SCOR). The SEC sent heaps of legal requirements but nothing concrete on how to draft a prospectus. Know any step-by-step guides for those starting from scratch?

Bill Tabler

President

Tabler Marketing

Marina Del Rey, Calif.

* * *

You're in luck. The only user-friendly prospectus a CEO can draft on his or her own happens to be for the type of stock offering you're planning. The U-7 form is required for SCOR, through which companies can raise up to $1 million a year. California is one of 28 states that honor U-7, a 50-question quiz on your business that shows how lucrative an investment it can be. Your job is to answer each question clearly and concisely, shedding light on all possible risks. A team of securities pros, including an in-state selling agent, should edit your draft (cost: $3,000) so it can serve as a prospectus.

Charles Utgard, CEO of SCOR Consulting Corp. (SCC), in Victorville, Calif., likens the process to drafting a business plan and suggests you keep a good business-planning guide handy. San Francisco securities lawyer Drew Field (see " Do Your Own Deal," Network, September 1992.) says James Dayley's SCORing Millions (Aim, 314-773-5700, 1993, $17.95) demystifies SCOR and offers concrete writing and filing tips.

State offering rules vary, so call the securities branch of your secretary of state's office or a regional SEC unit for a U-7 form and instructions. The North American Securities Administrators Association (202-737-0900) offers the form on disk for $10. If you submit a business plan to SCC (800-732-7267), it will give you a free opinion on how SCOR can work for you.

* * *

Catalog Curiosity
I want to advertise my rehabilitation and handicapped-access aids in a catalog. What contract issues should I watch for? How do I find suitable catalogs?

Steve Smith

President

USG

Menomonie, Wis.

* * *

Direct-marketing-media guru Asher Abelow of Valley Stream, N.Y., says few catalogs sell advertising space since postal-rate hikes forced many to cut circulation, and they don't want to risk distracting readers with ads for products other than their own. Catalogs that do sell ad space tend to be those targeted to a broader market than yours. Even if you were able to find a catalog in which you could buy advertising, rigid contract demands (high frequency commitments and steep rates) may not yield cost-effective results.

Instead, if catalog companies are interested in carrying your product, most of them will want to buy it directly from you. When you shop for catalogs, look for those targeting your market with similar or complementary wares. Hit a library for The National Directory of Catalogs (Oxbridge Communications, 800-955-0231) or The Directory of Mail Order Catalogs (Grey House, 800-562-2139). The Safety Zone (914-997-1935), Solutions/Norm Thompson (503-644-2666), Dr. Leonard's (718-768-0010), Comfortably Yours (615-867-9977), Rifton Equipment (914-658-3141), and Support Plus (508-359-2910) are good possibilities. Rate product exposure by comparing the catalogs' circulation, then audition your product by offering exclusives to catalog-merchandising managers.

Real Goods Trading, an alternative-energy catalog in Ukiah, Calif., requests vendor samples, then sends back a form asking for details on product use, shipping, and price. "We buy a projected three-to four-week supply because we want stock in-house before the catalogs go out," says CEO John Schaeffer. Since the company buys outright, it uses purchase orders instead of contracts.

Catalogs charge at least double vendor prices to turn a profit, so selling through them can cut significantly into your margins. But the added cash flow from the bulk orders could open the possibility of your using direct mail to promote your own catalog or individual products.

Bill Nicolai, president of Nicolai and Associates, a catalog-consulting firm in Seattle, suggests that advertising your product in magazines targeted toward your customers not only will increase sales but also will help you grow the list of prospects that will ultimately buy from your own catalog. Check the library for Gale Directory of Publications and Broadcast Media and Bacon's Newspaper and Magazine Directory to find magazines geared to your market. In the meantime, Nicolai recommends you take a look at The Direct Marketing Handbook (McGraw-Hill, 800-262-4729, 1991, $69.50) for a thorough overview of direct advertising and catalog marketing.

* * *

Curbing Cutthroat Couriers
My young mail-delivery/messenger service gets commitments from clients only to have them back out after their current, established courier matches our quote. We've never lost an account; we just can't gain any new ones. How do we compete with mature competitors?

Thomas Cupp

President

Premiere Delivery Systems

North Hollywood, Calif.

* * *

Realize your advantages as the new entry. If you're like most new businesses, you're more open to risk than established competitors are. You're also freer to respond to changes in the volatile market you're in, says Steve Miley, president of the Messenger Courier Association of the Americas (MCAA) and vice-president of Go-Between, a Los Angeles courier. "With fewer resources to shift around, you can change directions quickly," he adds. The tricky part is exploiting those advantages.

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