If you dream of taking your startup public one day, the time to start planning for your IPO is now. That doesn’t mean that you need to form a committee and set a listing date. It just means that you must constantly be cognizant of the factors that can influence IPO success rates.
Decisions you make now can affect your IPO in the future, whether it’s two years from now or twenty. You can begin to lay a solid foundation for public success by utilizing three simple strategies to plan ahead.
Focus on Steady Growth
Once your company decides to go public, you’ll face a myriad of complicated steps to complete, decisions to make, and regulations to follow. The process may seem overwhelming. Because of this, many organizations seek help from firms offering IPO services. These experts will help your business develop a communications strategy to tout the strength of your firm and accentuate its growth. This strategy is all about attracting investors.
As you develop a long-term plan for success, keep in mind that future potential investors in your company are going to examine your history from the beginning. During the early stages of your business, it may be tempting to swing for the fences constantly. If sales lag early, you may be quick to pivot to an alternative product or go back to the drawing board, intent on coming up with a radical new design.
While the ability to adapt to market changes is certainly an asset to any company, be sure to combine that talent with a focus on long-term, steady growth.
Potential investors will be reassured of your strength when they see that growth has been consistent and sales have climbed steadily. They’re not looking for a line graph with lots of peaks and valleys. If you find yourself needing to make adjustments to your initial strategy, do so with care. Patience is key. Investors value leaders who have developed a solid plan and have faith in its long-term success, despite minor setbacks in the beginning.
Be Mindful of Your Market
No matter how solid your long-term plan is, it won’t succeed if your product or service doesn’t have a long-term market. Initial dramatic pivots in business strategy may worry investors. However, if your business fails to pivot out of a dying market, it won’t exhibit the type of growth needed to attract interest from the public.
Corporate leadership needs to constantly gauge growth targets against market capacity. If the limited demand for your product is going to negatively affect revenue, then it may be time to make a drastic change in strategy. And it probably should mean that you put off any plans for an IPO until you have determined a new course of action. However, it will be worth the wait to ensure an adequate market for your business.
As your business grows, it may be tempting to focus on one particularly large customer or one exciting product. However, this may result in a single point of failure. If you lose one buyer, or if one product falls out of favor, can your business survive? Moreover, can it continue to grow? Investors are going to want to know the answers to these questions.
If you can’t survive without one thing, you may be setting yourself up to fail. Again, patience is key. Take the time to develop a line of products instead of focusing on just one exciting offering. Build a diversified customer base that will support your growth goals regardless of whether you lose one or two clients along the way. By taking the time to expand early and diversify, you improve your chances of success.
As a startup, it can be hard to juggle short-term deadlines with a long-term strategy. However, if your goal is to go public, you have to develop a plan that looks far into the future. Each decision you make will eventually be documented in the history of your company and will be analyzed by potential investors.
By focusing on the long-term instead of quick growth, making necessary market adjustments, and valuing diversity, you can set your company up to impress. This type of mindset requires discipline, but future investors will appreciate the vision.