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