Is It Viable That A Small Business Can Go Public?
I find it to be 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 for over 15 years now. And for 15 years I have been repeatedly asked in diverse ways " Can a small business like ours increase capital by going public? We simply have a million dollars in revenue. Aren't we quite small?"
The response has been and still is "Yes, you can go public. And no, you are not too small."
What is too small?
Well truly nothing. A company 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 concerning your business plan. If you are working on a development stage business plan and you are making progress, then we can probably take you public with that alone. If you are making five, ten or twenty thousand a month that is useful as 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 as the SEC and FINRA are rightfully trying to eradicate micro cap fraud, but yes it could still be done. If you have no revenues, although, you will have to have patience, some money in the bank to guarantee you can survive 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 "true" company and not just a "sham" set up for micro-cap scam.
If you are a small business and you don't plan to be mom-and-pop always, then "Going Public" is something you should look into in the very early stages. "Public" money is normally a lot cheaper as compared to "private" money.
I have seen private companies who feel they are very 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 very small and taking the venture capital route they raise ten or twenty million but end up with just five to six percent of the company in a few years.
This sort of dilution is totally needless. The same amount of money can be raised by going public while maintaining 60-65% ownership
Of course there are downsides to going public early too, but many of those have to do with being preyed upon by non-professionals, fraudsters, and others who truly don't know what they are doing. If you check out 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 sort of company, going public early on without venture capitalist could be worth billions and billions of dollars.
Bill Gates simply owns about fourteen percent of Microsoft. Just think how rich he would be if he owned sixty percent!
Now after the "Can I really go public?" kind of questions 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 - Buy reverse merger shell - should I do that? " But those are questions for another article. Stay Tuned.
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