Your business may be struggling to get the funding it needs after going the traditional routes. Finding investors came to no avail, and government entrepreneur grants fell through. But, you believe in your business, and you’re determined not to let your idea and brand be swallowed up in a cheap sell or cast off into the abyss. There’s a way to raise the necessary funds you need to fuel a project or raise capital in order to market and distribute your product at the latter stages of development. However you could simply be the owner of multiple businesses, and your main projects are secured under your umbrella personally, but in order to build a business empire, you want rapid expansion of one of your small businesses. Private business owners sell ownership in their company in order raise money while trading on the stock markets.
How to offer
Taking your business from private ownership to freely open to the public is going to be a process which needs your due diligence and patience. One route you may choose is to enlist an investment bank who will behave as your underwriter. An underwriter will talk to investors in or linked to, their portfolio and haggle with potentially interested individual investors what the set price for the stock share should be. When the initial public offering (IPO) goes live and is planned sufficiently the company shares will hit the stock market on the agreed price. While ultimately the aim is to raise capital from investors, the underwriter will inherently foot the bill for the transactions, providing an initial injection of funds for the business you chose to supply them with. The entire process can take months, and you can expect to pay in the hundreds of thousands of dollars for it.
Keeping a finger on the pulse
Should you decide to go public, you will enter into a category on the market sharing the platform with other businesses in a similar stage to yours. The FTSE Smallcap in the UK is for businesses with small capital looking for their stocks to be purchased by willing buyers, which in turn adds further capital. That money can be then spent on expansion such as hiring more employees, funding a marketing campaign, moving into a bigger office, funding a new product and or service. App developers for Android have made apps that show the fluctuation of the stock market in real-time. With a motivated young aspiring team, agile development is one of the things that app developers have been geared more towards, as the markets shift and change, more and more information is requested by investors.
The immediate aftermath
In a perfect world, you wouldn’t have to sell large percentages of your stock, because an IPO does not keep you in business, and it doesn’t guarantee a future. Make sure to keep focussing on your business, and use the capital to target a profit margin. Some young businesses are willing to lose money in order to grow steadily, but once you have investors on board, it’s your responsibility to give them a return on their investment; so spend money to make money. It’s essential to keep in mind that the process of IPO is a transaction. It can be easy or very complicated depending on the requirement and demands you put on investors looking to buy stock. Just because you have the funding you now need, it doesn’t mean that this is or should be your only route of getting funds.