The American business trend of building out to an eventual IPO (initial public offering) is changing: Companies such as Uber, which Fortune ranked No. 1 of the 25 most important private companies, are opting to remain private — and for good reason: When you’ve worked hard to create a successful business, the pride you have in running things your way and building customer relationships at your own pace are big reasons to keep things private.
But maybe you do have a long-term goal of continued year-over-year growth toward a possible future IPO. After all, an infusion of cash that big and a shift of risk to the public can be hard-to-resist temptations.
Yet an IPO can also mean sacrificing control of your company, increasing the focus on quarterly earnings to satisfy investors and — most alarmingly — jeopardizing the existing customer satisfaction you enjoy.
A fair trade? Absolutely not. So, instead, consider the following key considerations to stay private but also keep growing.
Private or bust
While the number of U.S. companies continues to increase, there’s been a 45 percent decline in the number of companies that are traded on stock exchanges since that number’s peak 20 years ago. Some public companies have even rescinded their public offerings and returned to private ownership.
Having worked with both publicly traded and private companies, I’ve seen stark differences in each type’s interactions with consumers and decision-making processes. And I’ve seen the rise in restrictions that public companies — centered on those quarterly goals — now face. To illustrate, an astounding 55 percent of public company CEOs will pass on an attractive investment project if it threatens their quarterly earnings targets.
This is why I advocate building a business you feel passionate about and avoiding the financial games. Grow it, pass it on to family members or…