We all know the idiom “if there is a will, there is a way” this will be the only mantra for the small-scale industrialists to make it bigger. Determination and challenges are essential to survive in our highly competitive business industry. First, we must keep faith within to conquer our target. Let’s look closely at the life of business tycoons.
We get similar things rather than a wish and will: hard work, proper business strategy, and goodwill. It is a challenging motto to establish own business and its sustainability. There will be a lot of ups and downs. But to overcome the adverse situations, proper planning is needed.
Some important notes we have to remember
• To set up a new business, one should know the market properly; very close scrutiny is necessary. Therefore, research vividly on the need of the mass and the supply.
• Collect information about the competitors who are already in the same field. Try to input some unique quality in your business. If you want to grab the attention of the masses, some uniqueness is much needed.
• Business capital might be a severe problem for SMEs. In this circumstance, one should rethink all your monetary resources. Then decide from where you collect the investments to start your dream project. Apart from investing in your property or private investors, there is another way to collect money from the money market. That is the investor’s investment through the primary market, where one can collect money for their own company. It is a legal business procedure approved by the SEBI (Securities and Exchange Board of India), a government organization, and regulated by ICDR (International Center for Dispute Resolution). Still, for SME IPO, it is scrutinized by the stock exchange. This is also legal. One should take legal action to enlist the business as IPO to obtain this benefit. It is economically proven that IPO is the best roadmap for small and medium enterprises (SMEs). At this stage, we have to gather some important notes about IPO.
Perception of IPO in a nutshell
IPO is the abbreviated form of Initial Public Offering. That is initiating your project by public offering or investments. By IPO, your dream project will get cooperation from investors. Here is the list of essential points: in IPO, private ownership will translate into public ownership. Therefore, an economic alliance starts between the investors and the company. Investors fulfill your need, that is capital of the project; in return, you have to give them money or shares as interest after making a profit from your business.
After enlisting its name, the company can start collecting money from the money market by selling its shares through the stock exchange.
Merits of IPO
- By this, a company can quickly raise a fund without personal or private investments. Sometime a vast amount of money can be collected and start or operate the business more planned way.
- If the business grows faster, several people would be aware of the success and improvement, more investors can come forward, and more capital can be invested, as it deals with many people.
- Investors who invest in IPO and hold the share have the opportunity to sell the shares according to their wishes. This option is a positive side of this type of investment. Shareholders usually sell the shares when the company share prices go up.
- As the business is associated with the government-regulated system, the company’s credibility also grows. And as it becomes a public company, many people will know the name of the company and the type of the business. As a result, the company also gets an easy opportunity for a free advertisement.
Demerits of IPO
- Company should be scanned through the Stock exchange with strict rules and regulations. In addition, the company should mortgage some fixed assets such as stocks, land, cash, and machinery equipment as security.
- Company has to recruit more persons for IPO share-related works. Additional Accountants are also needed to keep a close account of those issues. In addition, lawyers are required to resolve banks’ investment-related problems. Implementation IPO of the company may raise the company’s essential maintenance cost.
- As the company becomes a public company, the board of directors of the company has to announce the company’s profit or loss. Sharing the company’s growth is good, but information loss may demoralize the investors. Shareholders can get a close look and assess probable future turnover. After analyzing information from the investors, the company sometimes faces lawsuits
- Company has no complete authority to run the business according to its wish. As the company runs on public investments, the company has to inform the investors before making significant decisions or changes. It would be a time taking process and can create disruptions. In such cases company’s founder member would be demoralized or demotivated.
- May be called a public company, but most investors are not emotionally attached to the company like the founder member. Sometimes shareholders create trouble, and this may be a significant drawback.
- Company’s goodwill plays a crucial role in pricing the IPO shares. If the company is well known or improving fast, the price would be much higher than that of the not-so-well-known company. So make the name of your name first to collect the money more.
To survive in the long run, SMEs can enlist them in IPO. It will be better; a good cash flow is always needed to grow faster. Apart from pros and cons, IPO is a good choice for SMEs; in the present situation, investors have also come forward to invest. Just grab the opportunity to accomplish the dream of SMEs. Sometimes they might be acknowledged by international investors also, and from there, their business can get a chance to expand.