Details That Assist You To Understand Could A Small Business Go Public?
I noticed that it is an universal belief in the small business community that small businesses can't go public until they have important revenues, say something on the order of $10 to $20 million a year.
This is completely false.
I have been taking Small Businesses and Introduced companies public as a consultant for over 15 years now. And for 15 years I have been repeatedly asked in different ways " Can a small business akin to ours elevate capital by going public? We simply have a million dollars in revenue. Aren't we too small?"
The reply has been and still is "Yes, you can go public. And no, you are not very small."
What is too small?
Well in fact nothing. An organization who is bringing in one million in revenues would be no issue to take public. But it is truly not about your revenues, it is regarding your business plan. If you are working on a development stage business plan and you are achieving success, then we can probably take you public with that alone. If you are making five, ten or twenty thousand a month that is beneficial because it simply signifies that you are executing on your business plan.
It has become tougher and tougher to take a company public with no revenue and no business plans because the SEC and FINRA are rightfully trying to eradicate micro cap scam, but yes it could still be accomplished. If you have no revenues, however, you will need to have patience, some money in the bank to guarantee you can live for a couple of years, and you will have to be making genuine progress on your business plan to show the powers that be that you are a "genuine" company and not simply a "sham" set up for micro-cap scam.
If you are a small business and you don't think to be mom-and-pop forever, then "Going Public" is something you must look into in the quite early stages. "Public" money is usually a lot cheaper as compared to "private" money.
I have noticed private companies who feel they are very small to "go public" give up half of their company for a small six figure investment. At times companies with revenues in the millions feel they are too small and taking the business capital route they raise ten or twenty million but finish with only five to six percent of the company in a few years.
This type of dilution is completely pointless. The similar amount of money could be increased by going public while maintaining 60-65% ownership
Obviously there are downsides to going public early too, but many of those have to do with being preyed upon by non-professionals, swindlers, and others who truly don't know what they are doing. If you look into your advisers and get advice and structuring and referrals from experts who know what they are doing, you can eliminate most of the downside of going public early.
And if you feel you are possibly the next EBay or Google or Microsoft type of company, going public early on without venture capitalist could be worth billions and billions of dollars.
Bill Gates just owns almost fourteen percent of Microsoft. Just think how rich he would be if he owned sixty percent!
Now after the "Can I truly go public?" type of queries the next set of questions I usually get are "How do I raise capital when I go public? Do I do a merger reverse? " or " I see ads that say - Purchase reverse merger shell - should I do that? " But those are questions for another article. Stay Tuned.
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