I noticed that it is a common belief in the small business community that small businesses can't go public until they have noteworthy revenues, say something on the order of $10 to $20 million every year.
This is totally wrong.
I have been taking Small Businesses and Introduced companies public as a consultant for over 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 just have a million dollars in revenue. Aren't we quite small?"
The answer has been and still is "Of course, you can go public. And no, you are not very small."
What is too 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 in fact not relating to your revenues, it is about your business ideas. If you are working on a development stage business plan and you are achieving success, then we can probably take you public with that alone. If you are making five, ten or twenty thousand a month that is beneficial since it just indicates that you are implementing on your business plan.
It has become harder and harder to take an organization public with no revenue and no business plans because the SEC and FINRA are rightfully trying to eradicate micro cap scam, but yes it can still be accomplished. If you have no revenues, although, you will have to have patience, some money in the bank to warranty you can live 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 "genuine" company and not only a "sham" set up for micro-cap fraud.
If you are a small business and you don't think to be mom-and-pop always, then "Going Public" is something you should investigate in the quite early stages. "Public" money is usually 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. At times companies with revenues in the millions feel they are very small and taking the venture capital route they increase ten or twenty million but finish with only five to six percent of the company in a few years.
This type of dilution is entirely unnecessary. The similar amount of money can be raised by going public while sustaining 60-65% ownership
Obviously there are downsides 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 look into your advisers and get suggestion 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 possibly the next EBay or Google or Microsoft type 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 truly go public?" kind 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 - Purchase reverse merger shell - should I do that? " But those are questions for another article. Stay Tuned.
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