An IPO is the first time a privately held company issues stock to the public. An IPO, or initial public offering, converts a privately held company into one owned by public stockholders. It gives them access to the public capital market and boosts their reputation and exposure. However, becoming a public corporation reduces a small business's freedom and control. In many circumstances, an IPO is the sole remaining source of growth capital. Venture investors or founders who want to recoup their early investment can influence the decision to go public.

Staging an IPO is also a lengthy and costly procedure. A small business seeking to go public must apply to the Securities and Exchange Commission (SEC). A corporation must provide a variety of facts to potential investors in order to register with the SEC. The IPO process can take six months or two years, diverting management's attention from day-to-day operations.

Going public is a big choice that takes thought and planning. In addition, experts advise small business owners to evaluate their present and future capital needs, as well as the impact of an IPO on their future financing options.