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Some Information That Help You To Understand Can 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 every year.
This is totally false.
I have been taking Small Businesses and Start-Up companies public as a consultant above 15 years now. And for 15 years I have been frequently asked in various ways " Can a small business similar to ours elevate capital by going public? We simply have a million dollars in revenue. Aren't we quite small?"
The answer has been and still is "Of course, you can go public. And no, you are not too small."
What is very small?
Well actually nothing. An organization who is bringing in one million in revenues would be no issue to take public. But it is truly not relating to your revenues, it is about your business ideas. If you are working on a development stage business plan and you are making progress, then we can possibly take you public with that alone. If you are making five, ten or twenty thousand per month that is helpful since it simply signifies that you are implementing on your business plan.
It has become harder and harder to take a company public with no revenue and no business operations since the SEC and FINRA are rightfully trying to eliminate micro cap scam, but yes it could still be accomplished. If you have no revenues, although, you will have to have patience, some money in the bank to guarantee you can survive for some years, and you will have to be making genuine improvement on your business plan to show the powers that be that you are a "real" company and not only a "sham" set up for micro-cap scam.
If you are a small business and you don't think to be mom-and-pop always, then "Going Public" is something you should investigate in the very early stages. "Public" money is generally a lot cheaper than "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 very small and taking the venture capital route they raise ten or twenty million but end up with merely five to six percent of the company in a few years.
This kind of dilution is entirely pointless. The similar amount of money can be raised by going public while maintaining 60-65% ownership
Of course there are drawbacks to going public early also, but most 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 suggestion and structuring and referrals from professionals who know what they are doing, you can eliminate most of the downside of going public early.
And if you feel you are potentially the next EBay or Google or Microsoft kind of company, going public early on without venture capitalist might be worth billions and billions of dollars.
Bill Gates only owns nearly fourteen percent of Microsoft. Just think how rich he would be if he owned sixty percent!
Now after the "Can I truly go public?" kind of questions the next set of questions I generally 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 - must I do that? " But those are questions for another article. Stay Tuned.
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