Flip to the business section of any news site, and it is clear that there is a massive focus on public companies or soon-to-be public start ups of Silicon Valley. The hottest pieces of news and gossip tend to revolve around rumors of IPO’s and stats on how much owners made by taking their company public.
In this list, we are giving a shout-out to the now unsung heroes of the business world: the private company.
5 ways that private companies are better than public companies
1. A private company has no obligation to reveal its financial results to the public whereas the public company has to report every quarter. Therefore, they are relatively free from the notorious short-term pressures of Wall Street shareholders or analyst’s expectations.
2. Private companies do not have to share business details with the public, which can be beneficial when it comes to the subject of competition. As we all know, it can be of disadvantage if competitors know about your business secrets.
3. It is easier for private companies to invest in long-term growth strategies. Obviously the company can develop short-term goals but it can freely put efforts into R&D and investments that might not pay off instantly.
4. The private company has more freedom and flexibility when it comes to corporate governance. While it must apply accurate and current accounting practices, the private company doesn’t need to meet the complex accounting rules and standards applied to public companies.
5. The private business owner has no other formal authority to answer to as long as he or she operates within the law. Hence they have much more authority and control over business activities and decision-making.
What do you think about the advantages of private companies? Are they the key to future macroeconomic growth or a relic of the pre-IPO past? Let us know in the comment section below!
