Dear Ney Ney
When you start a business there are four possible outcomes: the business fails, you operate and grow the business as you want, you sell the business to someone else, or you turn the business into a public company. Let’s explore each of these outcomes in more detail.
Your business might fail. Many businesses fail, in fact the majority of businesses in America that start ultimately don’t work. That’s OK! Just because the business doesn’t work out it doesn’t mean anything bad about you, sometimes things just don’t work. The important part, especially for someone like you who is just starting out, Is to learn about starting a business by doing it. When you start a business, you learn as much about yourself, and what you like and don’t like, as you learn about the details of the business.
You operate and grow the business as you want.
Many people are very happy starting and working in their business for a very long time. For people who enjoy this, it is a great feeling. They get to enjoy doing work that they want, and often times they are able to balance work with other things in life that they might enjoy, like spending time with their families, traveling, and having other fun experiences experiences. Some people keep their business very small entire time that they on it and run it, while others grow their business to a large size, but enjoy it so much that they want to continue working in it.
Sell your business.
You might decide that you want to sell your face. There are many reasons that you might want to start your business, and many ways to go about selling it. You might sell the business because you have grown it as much as you can, and you want to start a new project. You might sell it because you are bored. You might sell it because you want to buy something very expensive, like a house, and if you want to use the money you get from selling the business to buy it. You might sell your business to another business if there’s something similar, you might sell your business to a group of people who invest in businesses for a private equity group, or you might sell your business to someone just like you, who wants to run their own business.
One difficult part of selling your business can be deciding how much to sell it for. Usually how much you sell your business for pens on what kind of business you have and how much money your business next year. Usually people are willing to pay what is called a multiple, or a certain number of times your annual earnings. So if you had a small landscaping business that earns $5,000 per year, and the multiple for a landscaping business is between “3x” and “6” then You could possibly sell your business for between $15,000 and $30,000.
Most people who buy or sell a business use the help of a person called a broker. A broker helps you find a person to buy your business, and helps you determine what is a fair price for the business.
Turn the business into a public company
A public business is a business that you can invest in by buying shares, or a piece of ownership, on a public stock market. Publicly traded companies are usually very large, like McDonald’s and Nike.
When you start a business, you get shares in your business. Shares represent your ownership of the business. Usually you get a lot of shares for your initial investment, and as you need or want money to grow the business you slowly give some of their shares to other people in exchange for them giving you money as an investment in the business. Only certain people can invest in businesses at the stage because it is very risky for investors.
This process is called raising capital, and not all businesses need to raise capital. Usually businesses that are expensive to start for wants to grow quickly by hiring a lot of people are the types of businesses that raise capital. People who invest in businesses want to make money by being able to sell the shares they bought at a higher price. As long as the company is private, that means not available for purchase by anyone in a public market like the New York Stock Exchange, it is hard for them to sell their shares. Companies work very hard to he allowed to sell their shares on a public market.
In order to go public, a company has to prove to the government that their company is well operated. It does this by filling out forms, call filing, with the securities and exchange commission. The company then uses the help of a large bank to find people and organizations willing to buy their first public shares, called an initial public offering or IPO. Once a company is publicly traded they have to regularly provide publicly available updates about the performance of their business, called quarterly filings.
Taking a company public is the ultimate goal of many, but not all, entrepreneurs.
What type of end to your business, or exit, that you want it’s up to you. Do not wanna exit, do you want to sell, or do you want to go public? It is good do you think about this question before you start your business, but you might also find that your answer to the question changes over time. That’s OK. What is more important, as I have said before, it’s just getting started. So go get started!
I love you.
Dad
