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For a successful business, you need a viable business idea, the skills to make it work and the funding. Discover whether your idea has what it takes.

Forming your business correctly is essential to ensure you are protected and you comply with the rules. Learn how to set up your business.

It is likely you will need funding to start your business unless you have your own money. Discover some of the main sources of start up funding.

Businesses and individuals must account for and pay various taxes. Understand your tax obligations and how to file, account and pay any taxes you owe.

Businesses are required to comply with a wide range of business laws. We introduce the main rules and regulations you must comply with.

Learn why business planning is an essential exercise if your business is to start and grow successfully, attract funding or target new markets.

Marketing matters. It drives sales and helps promote your brand and products. Discover how to market your business and reach your target customers.

Some businesses need a high street location whilst others can be run from home. Understand the key factors from cost to location, size to security.

Your employees can your biggest asset. They can also be your biggest challenge. We explain how to recruitment and manage staff successfully.

It is likely your business could not function without some form of IT. Learn how to specify, buy, maintain and secure your business IT.

Few businesses manage the leap from start up to high-growth business. Learn what it takes to scale up and take your business to the next level.

When to list your business on the stock exchange

Even the world's largest businesses started out as tiny operations. Google was founded by two men at university, while Apple was founded by three people. Now, Google is worth almost £1 trillion and Apple is worth more than the entire FTSE 100.

In order to grow at scale, both companies joined the stock market to access investor capital. But, before we analyse why and when many small businesses list on the stock market, let's take a look at what the stock exchange actually is.

What is the Stock Exchange?

A stock exchange is essentially a large-scale auction. Investors will negotiate a price for shares in a company based on its performance.

In order to be listed on the stock exchange, a company must go through an Initial Public Offering (IPO). As soon as the stocks are public, people can buy and trade them. Investors will buy shares hoping the value of the company increases over time. If the company they invest in performs well, investors may also receive dividend payments.

In addition, those who are trading stocks and shares also have the opportunity to speculate on price movements, rather than buying stocks directly. To do this, they use a derivative product that takes its value from the underlying market.

Many traders operate when the market is at its most volatile, such as during earnings report season when share prices fluctuate as market sentiment adjusts to reports released by each business.

Speculative traders do not have shareholder rights and do not receive dividends, but they do have the potential to profit from both rising and falling markets by going 'long' or 'short'.

When Is the Best Time to List?

There's no set 'best time to list' on the stock market. The time that's right for your company will largely depend on what your aim is.

The best time for most businesses to join is when they can no longer achieve their goals through self-funding. If you're struggling to gain penetration in a new market or lack the cash to upscale, then listing may be a great chance to raise capital. Similarly, if your business is loaded with debt, then listing can generate significant cash, which you can use to pay the debt down.

Why list my business on the stock exchange?

Floating your company's shares on a stock market can allow you to raise additional finance. Floating also provides a market value for company shares. Company shares can then be used to fund an acquisition or as an incentive for employees.

Businesses join the stock market for a number of reasons, including:

  • raising the company profile
  • boosting credibility with customers
  • appearing more attractive to lenders
  • selling interest to new shareholders
  • raising money

Although listing on the stock market has several advantages, listing isn't essential. For example, Danish toymaker Lego and confectionary giant Mars are both owned privately.

Remember, there are downsides to listing too. For example, public companies are at least partially publicly-owned, so you'll be held accountable to others and face more scrutiny. Similarly, the process of listing is expensive and time-consuming. Other potential downsides include:

  • You will dilute your ownership and could even lose control of the business completely.
  • There are extra regulatory requirements which you will have to comply with.
  • There can be substantial costs and unexpected hidden costs associated with a market listing
  • Paying shareholder dividends may negatively impact company cashflow.

So, if you believe in your business acumen and you're not desperate for funds, you may be able to go it alone.

Copyright 2020. Article made possible by Dan Hammond

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