I find it to be an universal 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 false.
I have been taking Small Businesses and Introduced companies public as a consultant above 15 years now. And for 15 years I have been constantly asked in different ways " Can a small business like ours elevate capital by going public? We only have a million dollars in revenue. Aren't we too small?"
The answer has been and still is "Yes, you can go public. And no, you are not very small."
What is very small?
Fine in fact nothing. A company who is bringing in one million in revenues would be no issue to take public. But it is actually not about your revenues, it is about your business plan. If you are working on a development stage business plan and you are achieving success, then we can possibly take you public with that alone. If you are making five, ten or twenty thousand every month that is beneficial as it simply shows that you are executing on your business plan.
It has become harder and harder to take a company public with no revenue and no business maneuver since the SEC and FINRA are legally trying to eradicate micro cap fraud, but yes it could still be done. If you have no revenues, however, you will have to have patience, some money in the bank to guarantee you can live for some years, and you will have to be making genuine development on your business plan to show the powers that be that you are a "genuine" 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 forever, then "Going Public" is something you should look into in the quite early stages. "Public" money is generally a lot economical 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 too small and taking the venture capital route they raise ten or twenty million but finish with merely five to six percent of the company in some years.
This type of dilution is totally pointless. The same amount of money could be raised by going public while maintaining 60-65% ownership
Obviously there are drawbacks to going public early as well, 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 advice 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 probably the next EBay or Google or Microsoft kind of company, going public early on without venture capitalist may be worth billions and billions of dollars.
Bill Gates just 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?" type 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 - Purchase reverse merger shell - must I do that? " But those are queries for another article. Stay Tuned.
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