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Grow Fast, Go Public
Going public or private both have advantages and disadvantages. Shareholders own stock in public companies, and the company managers will have to deal with them by providing a lot of financial information. Public companies also have the advantage of expanding faster than private companies because they raise money easier. A private company expands slower as they have to get their money through loans from a bank or a private investor that in the long run can be more expensive. My pencil eraser company needs more money to create a new plant, and I have decided to go public, and get the money from investors who will purchase shares of stock in my company.
People who agree with staying private may say it is a safer business strategy and also gives you more freedom to do what is best for the company. They would prefer not having to deal with satisfying shareholders and providing financial reports to the public. Also, if you stayed private you would not have to worry about having bad quarters, and focusing on the deals that would make money right away. Instead, a private company would be able to work on deals which they believe will make more money in the long run. These are all logical points, but taking my company public is the right decision. Building a new plant will allow us to grow quickly and succeed for a long time.
The company wants to expand further than this factory and become very big. Other benefits that come with going public are that public companies can receive more attention. The more publicity my company receives, the more people will know about our product influencing the price of the companies stock. Going public may also allow us to do more advertising with the extra money we raise from the investors. In addition, going public will allow us to keep employees, and draw in new personnel by offering them shares in the company. Since we make pencil erasers that look like characters from the movies, our product is somewhat dependent on Hollywood’s ability to make good movies with popular celebrities. We believe they will. Since the popularity of movie celebrities will continue, it will have a direct effect on our product. Every time there is a successful movie, celebrity publicity will help promote our products and increase our sales. As a result, we will become more profitable, and being a public company will offer us our best chance for future success.
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