President Obama signed the Jumpstart Our Business Startups Act (JOBS Act) which was enacted to help startup companies. Statistics show that entrepreneurship is the key to job creation. The Jobs Act would give new companies more flexibility in raising capital, which would allow the businesses to expand more quickly and create more jobs. The Act allows for all Americans to invest in new companies and reduces the red tape involved in publically selling stock. The Securities and Exchange Commission is responsible for passing regulations regarding this law. Time will tell exactly how much impact the JOBS Act will have on the job market.
“In an effort to help businesses attract investors and acquire loans, the bill relaxes several regulations. It would allow companies with less than $1 billion in annual sales, or that are selling less than $700 million of stock, to give investors two years of financial reports before the businesses make a public stock offering. Current law requires three years of financial reports. In addition, the legislation would allow investment banks to publish research about their clients’ stock offering deals prior to an initial public offering (IPO). Now, banks are barred from releasing this information under a so-called “quiet period” rule, which was designed to prevent the manipulation of stock prices” said House Majority Leader Eric Cantor, R-Va.
Well-established small business can more easily find accredited investors, those with a net worth of $1 million excluding the value of their primary residence. The law lifts a ban on advertising to the general public about investment opportunities, no longer forcing companies to hire brokers.
What Should Employers Do as a Result of the Bill:
- Get all your documents in place. Have your business plan, incorporation documents, financial forecasts and a full executive team bio.
- Do market research. Get facts in order to have a strong argument as to why people should fund your company.
- Make a Video. This video should explain your company and what you have to offer.
- Develop a “Pitch”. Tell your company story and develop the pitch that helps people understand what your company does.
References:
Leonard, B. (3/14/2012) The New Jobs Act Would Jump-Start Job Market by Aiding Startups, Shrm.org
Business Wire (4/11/2012). As Obama Signs JOBS Act, Prosper Inc. Supports Startups and Small Businesses with One-to-One Mentoring Programs,
Huhman, H. (4/2012) JOBS Act To Jumpstart The Job Market, Forbes Magazine
