One of the most prodigious hurdles faced by any small- to medium-sized business is access to liquid capital.
Without these funds, growth is nearly impossible and a well-planned operation could quickly grind to a halt. This is why many stakeholders choose to sell shares. There are several discrete advantages associated with this method and let us take a quick look at four of the most profound in order to appreciate why online trading has taken a firm foothold within the modern business community.
The Ability to Raise Short-Term Capital
As this is the most obvious benefit, it should be mentioned first. A company that issues shares is able to generate an appreciable source of income within a short period of time. Unlike loans, there are no issues in regards to repayments.
All shareholders will be paid back in the form of dividends and if the price of the stock rises, they will naturally profit as a result. It should also be mentioned that these stocks can be used as a type of equity in the event of a merger or acquisition.
Attracting Additional Investors
Companies which engage in selling shares will naturally attract the attention of others who might be interested in what is being offered. This is an excellent way to raise awareness about a specific product or service. Furthermore, a growing number of investors equates to a larger overall market capitalisation. These individuals can also provide a greater level of oversight in regards to day-to-day operations.
Avoiding Excess Debt
In the event that a company takes out a loan in order to make financial ends meet, this loan essentially represents a new form of debt. Interest rates will also need to be dealt with; a potential pitfall in the event that the organisation is working with a limited amount of capital.
Firms which sell shares are able to avoid the extra burden of debt. This is another extremely attractive quality to investors and the liquidity obtained from such a sale can be funnelled back into core operations.
A Shared Level of Responsibility
One of the dangers faced by many business owners is the concept of sole responsibility. In other words, they are the ones who need to come to terms with a failed company; both legally and financially. This is not the case if a firm decides to disseminate shares.
One of the main principles behind such a sale is that investors will share the risk with any primary stakeholders. In the event that the firm does indeed become insolvent, the potential of one individual accruing a massive loss is dramatically reduced. In other words, the risk is evenly spread “across the boards”.
While the most pronounced advantage associated with selling shares is access to capital, the other benefits mentioned above should never be taken lightly. The good news is that such actions are easier to execute than ever before.
CMC offers a share-selling platform which provides real-time insight within a user-friendly framework. Not only is this very convenient for the company in question, but other tools such as advanced charting capabilities and access to relevant news feeds can be leveraged in order to take advantage of any sudden movements. The benefits of selling shares should now be quite clear.