How do we go through the process of making our company publicly traded?
We have a company that has been in business for three years. The first year of business we had $65,000 in sales, the second year we had $650,000 in sales, and this year we will hit $3,000,000 in sales. We want to double the amount of effective advertisements and make the company publicly traded. How do we do this?
What you are contemplating in "going public" is the process of an Initial Public Offering or IPO. This is a complex process that could involve a number of professionals such as an investment bank as an underwriter, external auditor, stock transfer agent, broker dealer, and others. The best place to start is to contact an attorney with a speicalty in securities law who can explain the process, what their role would be, whether your firm would qualify as a publicly traded business, what securities laws and regulations you will be subject to, and guide you through the process if it would indeed be in your best interst to do so.
While your firm's growth is admirable, you fit the definition of a small business, as per the Small Business Administration, until you reach revenue levels in excess of $35 million. As such, an IPO may be out of your reach. I'm aslo concerned that you did not mention what your profitability is and how that compares to other firms in your industry. As an alternative, you might consider taking in private investors who would contribute capital that could be used to fuel further growth. Contracts and agreements would be required and, again, an attorney is your best resource for this.
Congratulations on the revenue growth for your firm. While taking a company public is one option, it may not be in your best interest.
There are many factors to consider when looking for growth capital and as a public company there are several compliance, regulatory and filing costs that are ongoing.
Additionally, there are private firms that specialize in business advisory as it relates to growing and selling a business. Most of the ones I work with are free for an initial consultation to see what is the best path for you to take moving forward.
Best of luck and congratulations on your early success.
What a terrific growth trajectory. I guess the first thing any investor would ask you is what kind of growth will you achieve on a sustainable basis? And how will you get there?
My gut reaction is that you ought to be putting 100% of your effort into managing the company and making its profitability sustainable. This is the most important goal in the near term and it will definitely make you a very wealthy person. There doesn't really seem to be any need to go public yet, and I think that at $3MM in revenues (you don't say what your EBITDA is) you are still way too small. There are some tremendous hassles involved in being a public company -- regulatory and listing requirements, as well as time consuming shareholder communication -- and I would advise you not to do it yet. But that kind of growth implies that you clearly will need capital soon. There are lots of sources that, while costly, might compare favorably to the costs of being public.
By the way, it is possible to grow too fast and crash as a result. Be careful. I know it's a nice problem to have but it is still a problem. "Effective advertisements" don't seem that necessary right at the moment. You may have more of a problem by attracting too many customers than not enough. Make sure your customer service does not deteriorate or your word-of-mouth will suffer. Consider bringing in a few seasoned managers to help you.