When your company reaches the significant developed stage - a successful enterprise, then you may need additional capital.
In that scenario 'going public' would be the right choice! But before you decide on it, weigh all you options and alternatives carefully.
Being a private company, funding always has limitations and with that sparse capital; you cannot dream about growing and expanding your company in terms of size and scale. What to do in this situation? The road of 'going public' or 'listing' is open for you.
If your enterprise is in the early on stage of development then you also have an option to pursue bulky loan from financial institutions or Small Business Administrations. Another option could be, by raising funds by selling securities in transactions, which are exempted from the registration process. If you want to go public, then all your offerings must be registered with SEC (Securities and Exchange Commission).
Earlier, public market was available only for large organizations with good profitability history, but nowadays, small and medium companies with varying degrees of revenue growth and profitability have a chance to access capital growth through public markets.
Going public can be handled in many ways:
- IPO (Initial Public Offering): You need to register your stocks with SEC in order to sell the public equity ownerships. If your enterprise has never sold stocks before then it will be called IPO
- SCOR (Small Corporate Offering Registration): This is a hassle free and low cost alternative for IPO, where the equity capital of up to $1 million can be raised through the counter sale of the common stocks
- ACE-Net (Angel Capital Electronic Network): You can fill up the online form for your stock offerings at the website of SBA, The Office of Advocacy, which helps small and medium companies to list their stock offerings and hunt for accredited investors if needed.
Benefits of going public
- Increase in liquidity and share price
- Motivation for the employees and the management
- Increase in prestige and overall image of the company
- Get alternative capital sources
- You will get the ancillary benefits
- You can get highly qualified employees and it'll be easy to retain them
- You'll get a ready market for your shares