| It is a common misconception in the small business | | | | 5) Grow your company faster and make it more |
| community that one's company has to be a certain | | | | powerful by increasing your ability to attract |
| size and have a certain amount of revenues before | | | | "mergers", "acquisitions" and "strategic partners. |
| one can go public. | | | | 6) Grow your company faster and make it more |
| I have been taking Small Businesses and Start-Up | | | | powerful by increasing its ability to compete for large |
| companies public as a consultant for over 10 years | | | | corporate contracts. |
| now. And for 10 years I have been repeatedly asked | | | | 7) Grow your business faster and make it more |
| in various ways "Can I really go public? We only have | | | | powerful by increasing your status in the eyes of all |
| a million dollars in revenue. Aren't we too small?" | | | | those you do business with. |
| The answer has been and still is "Yes, you can go | | | | 8) Leverage your personal return on investment as |
| public. And no, you are not too small." | | | | an owner by decreasing the amount of time it will |
| A company doing a million dollars a year in revenues | | | | take you to make money on your investment, as |
| would be relatively easy to take public. Even a | | | | well as increasing the valuation of your company, as |
| company doing a couple hundred thousand in | | | | well as, changing the liquidity of your asset to a much |
| revenues would be relatively easy. And though four | | | | more liquid form than that of a private company. |
| or five years ago we could take a company public | | | | If you are a small business and you don't plan to be |
| with just a business plan and no business operations, | | | | mom-and-pop forever, then "Going Public" is |
| that scenario has become, admittedly, very hard to | | | | something you should look into in the very early |
| do, though still not impossible. | | | | stages. "Public" money is usually a lot cheaper than |
| It has become harder and harder to take a company | | | | "private" money. |
| public with no revenue and no business operations | | | | I have seen private companies give up 50% of their |
| because the SEC and NASD are rightfully trying to | | | | business for a $100,000 investment. By the time they |
| eliminate micro cap fraud, but yes it can still be done. | | | | have raised twenty million dollars privately, they |
| If you have no revenues, however, you will have to | | | | typically only own 5% or 6% of their company. If |
| have patience, some money in the bank to | | | | that individual had gone public as a start up they |
| guarantee you can survive for a couple of years, and | | | | could have typically raised the same twenty million |
| you will have to be making genuine progress on your | | | | dollars and still have retained 60-65% of their |
| business plan to show the powers that be that you | | | | company. |
| are a "real" company and not just a "sham" set up | | | | Of course there are downsides to going public early |
| for micro-cap fraud. | | | | too, but most of those have to do with being |
| The advantages to going public in the early stages, | | | | preyed upon by non-professionals, fraudsters, and |
| rather than waiting, can be substantial. | | | | others who really don't know what they are doing. If |
| 1) Leverage a larger retention of ownership | | | | you check out your advisors and get advice and |
| 2) Grow your company faster and make it more | | | | structuring and referrals from professionals who |
| powerful by attracting top personnel without | | | | know what they are doing, you can eliminate most |
| necessarily huge cash outlays | | | | of the downside of going public early. |
| 3) Grow your company faster and make it more | | | | And if you are potentially the next Microsoft (or |
| powerful by attracting top notch team members to | | | | even just a shadow of that giant), the decision to go |
| your board of directors. | | | | public early on could make you millions if not billions of |
| 4) Raise money faster and cheaper by increasing the | | | | dollars in the extra equity that you retain and don't |
| "liquidity" factor for your investors. | | | | give up to venture capitalists. |