Do you think your customers are stupid? They know there is a recession. They are living in it every day. They know their corporate lives are getting tighter, their home budgets are getting tighter and everything else in the world is a little more economically unstable right now. So, acting like there is no recession is nothing more than you showing your customers you don't know what is happening in the world. Instead, you need to be honest with your recession knowledge and even use it as a part of your sales advantage.
Confront the Recession
Bill Bartmann tip #1 for recession advertising is to really understand the recession and how it is impacting your industry. Every industry is impacted differently in this type of economic climate. You really need to understand what it is doing to your field.
You also need to understand what the recession is doing to your customers. Look at how it is changing their lives and their thoughts. They are likely stressed out and worrying about every dollar they spend. This doesn't mean they are not willing to spend those dollars; they just want to make sure they are making wise decisions. The more you understand them, the easier it will be to convince them spending their money with you is a wise way to go.
What Can You Offer
Bill Bartmann tip #2 Next you need to look at what you can offer to your customers in this economic climate. For the most part the trends are this ? luxuries are down, necessities and 'home comforts' are up. Many people are trying to spend the money they do have on the things they need and things that make them feel safe and comfortable.
You now need to see how you can fit into this picture. There are a few ways to go with this:
Be a Necessity - If you sell something that should be a necessity for your customers make sure they know that. For example, If you have a number of 'food saver' items that make your food last longer in the fridge, you may want to push those now as a way to help people save money on their grocery bill by making those groceries last longer.
Make Luxuries Necessities - The other option is to take those luxuries they don't think they need and explain that they do. For example, if you do manicures and you are seeing a drop in business, you may want to change your advertising to point out the relaxation benefits of manicures. Also, make sure you let your customers know that stress, which is up right now, can lead to illness and that it is vital for their health that they do something to lessen their stress load.
There are a number of ways to make it well through the current depression. They key is in understanding how people perceive the recession and making sure you give them a way to see your company as a vital partner in getting through it.
Bill Bartmann is the creator of the Billionaire Business Systems, an online business essentials course for entrepreneurs. Bill Bartmann's series of videos, books and seminars has helped many entrepreneurs succeed in business even during tough economic times. Learn more at http://www.billionaireu.com/
What is Pre-IPO capital? Well it's exactly that, capital that is raised prior to an IPO.
So to make things clear, an IPO, or initial public offering, refers to the time when a company is about to list on the stock exchange, and they have issued a prospectus in order to attract investors funds. The amounts sought vary greatly depending of the size of the company and the need for capital. So if you invest into an IPO, you get the prospectus via a broker or online, fill in the application form and post it in along with a cheque. About 3 to 4 weeks later the company lists and you get your shares which you can immediately sell if you want to.
You are usually limited by the maximum number of shares you can subscribe to. It may be $10,000 for example. There will also be a minimum subscription. This varies from float to float of course.
The other thing that is common with an IPO offering is that there is a defined time period in which you must respond. - usually about 3 weeks. This allows the company and their broker to coordinate the float with the exchange. It also creates urgency for the investor by giving you a deadline in which to make a decision by.
The basics on Pre-IPO?
Pre-IPO is much different to this, although it sounds similar. Pre-IPO is raised anywhere from 3 months to 18 months prior to the company listing onto the ASX. It is usually done without a prospectus and in most cases is done at a time when there is no stock-broker representing the company or underwriting the float.
At the pre-IPO level, there is no guarantee that the company will make it to the actual IPO, what the share price will be, or even which broker will do it. Also, because it may take up to 2 years before the company floats, you money is pretty much tied up until then.
As you can see, there is higher risk involved. To reflect this, pre-IPOs are usually offered at a considerable discount to the anticipated IPO price. For example, if company X believed that they will list for $1, they may offer shares in a pre-IPO capital raising at $0.25. Should they end up listing for $1, they you make 4 times on your money at the IPO.
Most investors have not even heard of pre-IPO investment opportunities. This is because they are only usually marketed to wholesale investors, high net worth individuals, professional investors and investment funds. So to gain exposure to one, you sort of need to know the right people. Even high net worth individuals do not often get exposed to pre-IPO opportunities simply because they are not connected to the company or the broker/advisor managing the offer.
Most opportunities are restricted to ?wholesale? investors however limited opportunities are sometimes available to some ?retail? investors.
Key strategies for reducing investor risk in Pre-IPO opportunities?
There is no safe way to invest into pre-IPO opportunities. Simply because there are many factors that may prevent the company from reaching the stock market. So the key is to invest into companies that are fairly close to listing. Some of the indicators for this are: ?Estimated listing timetable stated in Information Memorandum document (ideally within 12 months) ?Board of directors in place ?CEO in place ?Key management and staff in place ?Lead broker in place (or at least shortlisted) ?Legal team in place (for IPO) ?Accountant in place (for IPO) ?Advisor in place (for IPO) ?Financial projections completed ?Profitable ?Market opportunity clearly defined ?Share capital structure in place ?Value entry level established
Its not necessary to have all the above criteria ticked, but the more the better as each criteria lessens the risk for you, the investor.
How do you know the company is going to list? The short answer is you don't. Even some IPO's have been pulled at the last minute. The bottom line is investing into Pre-IPO is risky, so be sure to only invest what you can afford to lose. And only invest a maximum of say 10% of your investment portfolio.
However when they work, the returns can be quite staggering. I know of a recent float where the pre-IPO investors bought in at $0.10 per share, less than 4 months before the IPO. The company floated at $0.20 and within 6 months, the shares rose to over $0.60. That's 6 times your money within a year. However bear in mind that this was relatively speculative, and the pre-IPO investors could just have easily been left holding the stock for a couple of years.
In terms of Due Diligence, its wise to spend about 20 min on the phone to the CEO or better still, meet with them. Get them to answer any questions you have about the company and its ability to deliver on its promises. If you are investing $100,000 or more, it's time well spent. If you were to spend a similar amount on a car, Im sure you would take it around the block a couple of times, so make sure you do some homework when looking at a pre-IPO investment.
So how do you gain access to pre-IPO opportunities? Speak to your broker or get to know an advisory firm who specialises in pre-IPO capital raisings. From time to time, you will also see them advertised in the Financial Review (www.afr.com.au). It's free to enquire and even if you don't invest, its good to get a feel for this type of investment prior to writing a cheque.
? Len McDowall, Integral Capital Group 28th August, 2007
Both Carol Beard & Len Mcdowall are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Carol Beard has sinced written about articles on various topics from Bathroom Vanity, Family and Acai Berries. Bill Bartmann is a self-made billionaire who went from homeless at the age of 14 to becoming a billionaire, going bankrupt, then bouncing back to do it again! Bill has had his self-doubts and even bouts of depression; he wouldn't be human otherwise. How. Carol Beard's top article generates over 450000 views. to your Favourites.
Len Mcdowall has sinced written about articles on various topics from Business Plan, Advertising Guide and Investments. Len McDowall was previously inaugural Chairman & Managing Partner of Bird Cameron, Chartered Accountants, (now know as RMS Bird Cameron) which employed 1000 people in 50 offices in Australia & Hong Kong. Len established Bird Cameron's mergers & acquisitio. Len Mcdowall's top article generates over 880 views. to your Favourites.