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Some Information That Assist You To Know Can A Small Business Go Public?
I noticed that it is a common belief in the small business community that small businesses can't go public until they have significant revenues, say something on the order of $10 to $20 million per year.
This is totally wrong.
I have been taking Small Businesses and Start-Up companies public as a consultant for over 15 years now. And for 15 years I have been frequently asked in diverse ways " Can a small business similar to ours raise capital by going public? We only have a million dollars in revenue. Aren't we very small?"
The answer has been and still is "Obviously, you can go public. And no, you are not too small."
What is too small?
Fine truly nothing. An organization who is bringing in one million in revenues would be no problem to take public. But it is actually not regarding your revenues, it is about your business notions. If you are working on a development stage business plan and you are making progress, then we can probably take you public with that alone. If you are making five, ten or twenty thousand per month that is useful since it just shows that you are implementing on your business plan.
It has become harder and harder to take an organization public with no revenue and no business maneuver because the SEC and FINRA are legally trying to eradicate micro cap scam, but yes it can still be done. If you have no revenues, although, you will have to have patience, some money in the bank to warranty you can survive for a couple of years, and you will have to be making genuine improvement on your business plan to show the powers that be that you are a "true" company and not only a "sham" set up for micro-cap fraud.
If you are a small business and you don't plan to be mom-and-pop always, then "Going Public" is something you should inspect in the very early stages. "Public" money is usually a lot economical as compared to "private" money.
I have noticed private companies who feel they are too small to "go public" give up half of their company for a small six figure investment. Sometimes companies with revenues in the millions feel they are very small and taking the venture capital route they increase ten or twenty million but end up with only five to six percent of the company in some years.
This sort of dilution is entirely unnecessary. The same amount of money can be raised by going public while sustaining 60-65% ownership
Of course there are downsides to going public early also, but many of those have to do with being preyed upon by non-professionals, swindlers, and others who really don't know what they are doing. If you check out your advisers and get suggestion and structuring and referrals from professionals who know what they are doing, you can reduce many problems of going public early.
And if you feel you are probably the next EBay or Google or Microsoft type of company, going public early on without venture capitalist might be worth billions and billions of dollars.
Bill Gates simply owns nearly fourteen percent of Microsoft. Imagine how rich he would be if he owned sixty percent!
Now after the "Can I really go public?" sort of questions the next set of questions I normally get are "How do I raise capital when I go public? Do I do a merger reverse? " or " I see ads that say - Buy reverse merger shell - should I do that? " But those are queries for another article. Stay Tuned.
Some Information That Assist You To Know Can A Small Business Go Public?
I find it to be a common belief in the small business community that small businesses can't go public until they have significant revenues, say something on the order of $10 to $20 million a year. This is totally false.
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