Is It Feasible That A Small Business Can Go Public?

I find it to be a common 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 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 frequently asked in various ways " Can a small business akin to ours raise capital by going public? We only 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 too small."

What is too small?

Fine actually nothing. A company who is bringing in one million in revenues would be no problem to take public. But it is actually not relating to your revenues, it is about your business ideas. 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 shows 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 because the SEC and FINRA are legally trying to eliminate micro cap fraud, but yes it can 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 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 should investigate in the very early stages. "Public" money is usually a lot economical than "private" money.

I have seen 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 venture 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 raised 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, fraudsters, 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 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 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?" 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 - Buy reverse merger shell - should I do that? " But those are queries for another article. Stay Tuned.

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