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 a year.
This is totally wrong.
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 repeatedly asked in different ways " Can a small business similar to ours raise capital by going public? We only have a million dollars in revenue. Aren't we too 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 in fact nothing. An organization who is bringing in one million in revenues would be no problem to take public. But it is actually not about 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 a month that is beneficial since it just shows that you are executing on your business plan.
It has become harder and harder to take an organization public with no revenue and no business maneuver as the SEC and FINRA are rightfully trying to eradicate micro cap scam, but yes it can still be done. If you have no revenues, however, you will have to have patience, some money in the bank to warranty you can survive for some 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 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 forever, then "Going Public" is something you should investigate in the very early stages. "Public" money is normally a lot cheaper 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 too small and taking the venture capital route they increase ten or twenty million but end up with just five to six percent of the company in a few years.
This type of dilution is entirely unnecessary. The same amount of money could be raised by going public while sustaining 60-65% ownership
Of course there are drawbacks to going public early too, 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 advice 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 sort of company, going public early on without venture capitalist could be worth billions and billions of dollars.
Bill Gates just 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?" type 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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Links to Other Articles
- Choosing The Right CMS For Your Small Business
- Some Information Which Aid You To Know Can A Small Business Go Public?
- Is It Viable That A Small Business Can Go Public?
- Is It Viable That A Small Business Can Go Public?
- Is It Possible That A Small Business Can Go Public?
- Some Information Which Aid You To Understand Could A Small Business Go Public?
- Is It Viable That A Small Business Can Go Public?
- Is It Viable That A Small Business Can Go Public?