Is It Possible That A Small Business Can Go Public?

I noticed that it is a common 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 per year.

This is completely 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 frequently asked in various ways " Can a small business akin to ours raise capital by going public? We simply have a million dollars in revenue. Aren't we very small?"

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

What is too small?

Fine actually nothing. An organization who is bringing in one million in revenues would be no problem to take public. But it is truly not regarding your revenues, it is regarding 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 per month that is helpful because it just signifies that you are implementing on your business plan.

It has become tougher and tougher to take a company public with no revenue and no business operations because the SEC and FINRA are legally trying to eliminate micro cap scam, 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 "real" 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 always, then "Going Public" is something you must 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 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 very small and taking the business capital route they raise ten or twenty million but end up with only five to six percent of the company in some years.

This kind of dilution is completely unnecessary. The same amount of money can be increased by going public while maintaining 60-65% ownership

Of course there are downsides to going public early also, but most 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 suggestion and structuring and referrals from experts 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 type of company, going public early on without venture capitalist might be worth billions and billions of dollars.

Bill Gates only 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 queries 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 queries for another article. Stay Tuned.

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