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Is It Viable That A Small Business Can Go Public?

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I find it to be an universal 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 per year.

This is totally false.

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 constantly asked in different ways " Can a small business like ours raise capital by going public? We just have a million dollars in revenue. Aren't we quite small?"

The reply has been and still is "Yes, you can go public. And no, you are not too small."

What is very small?

Well actually nothing. An organization who is bringing in one million in revenues would be no issue to take public. But it is truly not about your revenues, it is regarding your business notions. 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 every month that is helpful because it simply indicates 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 plans since the SEC and FINRA are rightfully trying to eradicate micro cap fraud, but yes it can still be done. If you have no revenues, although, you will need 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 improvement on your business plan to show the powers that be that you are a "genuine" company and not simply 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 look into in the very early stages. "Public" money is usually a lot economical than "private" money.

I have noticed 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 business capital route they increase ten or twenty million but finish with only five to six percent of the company in a few years.

This sort of dilution is entirely needless. The similar amount of money could be raised by going public while maintaining 60-65% ownership

Obviously 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 truly don't know what they are doing. If you look into 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 simply owns almost fourteen percent of Microsoft. Imagine how rich he would be if he owned sixty percent!

Now after the "Can I really go public?" sort of questions the next set of questions I normally 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.