TO RAISE MONEY. This is axiom of finance that most business owners want to revoke. Since they can't revoke it, they ignore it.

In beginning, you need money to start your company. You invest your money. Your close family members invest their money. Thereafter, your efforts to raise money from investors will cost you money. There are three basic steps in raising private risk capital.

Step I. You must have a business plan. You can hire a professional to write it. They will charge you anywhere from $8,000 to $75,000. If you write it yourself, it will take your time. Time is money. Unless you have written several successful business plans, you should have a professional business writer edit your business plan. It will cost you anywhere from $3,000 to $25,000 to have it edited.

Step II. Your investment offer must comply with State and Federal Laws. Assuming you are seeking a million dollars in risk capital, you should file a 504 Reg D Exemption with U. S. Securities and Exchange Commission. While any High School Graduate can complete filing, you should have Reg D form reviewed by an attorney. The attorney will charge anywhere from $3,000 to $10,000 to ensure that you haven't made a clearly fraudulent filing.

Because it allows advertising your risk capital investment, usual State filing is a SCOR (Small Corporate Offering Registration). Filing a SCOR meets Federal 504 Reg D requirements. In California, SCOR State filing fee is $2,500. If you have an attorney prepare your SCOR filing, it will cost you between $5,000-$50,000.

A DPO (Direct Public Offering) is a SCOR filing that includes investment advertising on Net. It will cost you anywhere from $75,000 to $225,000.

Investors pay a commission and a spread whenever they buy a NASD stock. This is true about stocks trading on Over-the-Counter Bulletin Board (OTCBB). It's true of Nasdaq stocks.

NASD brokerage commissions can't exceed 5%. Investors are stampeding to Net to save on brokerage commissions. Few brokerage firms still charge 5%. However, Net traders pay less than 1% brokerage commissions.

What investors don't realize is that there's a spread. This is commission charged by market makers. The NASD doesn't regulate spread. It can be 25%. What difference does it make if an investor saves 4% on brokerage commissions and pays 25% on spread?

Investors believe that Bid/Ask prices represent highest Bid and lowest asking price for any stock. In reality, Market Maker sets Bid & Ask prices. The pricing structure benefits short term cash needs of Market Maker to make money. It's rare to have a Market Maker that trades a company's stock for benefit of company or public.