£1 Share becomes a +£1 Share...how?

[MarkCrowther]

Hi All,

As a lighthearted gesture a friend in the pub gave me a £1 coin for a single £1 share and told me to "turn it into £1000 by the end of the year". Which got me thinking... exactly how does that happen?

I guess it's due to what people think they'd receive by way of a dividend payment? So if the business had profits of £100k all 100 ordinary £1 shares could be said to be worth £1k? Or the dividend payment per share could be expected as £1k? Or am I off the mark here?

Thanks in advance,

Mark Crowther

[Ian J]

From the way that you have phrased the question it would seem that your friend was referring to overall profits and not dividends.

The traditional way to turn £1 into £1,000 is to buy something for £1 and sell it for £2 or £3 and to re-invest the proceeds into more "stock" that one can again sell at a higher price - continuing onwards and upwards until the target has been reached.

Allegedly that is how Alan Sugar (amongst others) started off

[www.infoebookstore.co.uk]

Wasn't there someone recently who started with nothing and swapped up until he had a house?

[JamesS]

The shares will be worth something if the company does well

You then keep your shares and reap the benefits, sell the entire company or sell shares in the company for x%. You can then use that money to reinvest back into the company or if you sold your shares, take the cash and buy something rather nice with it.

[crewboy25a]

Doesnt the company have to be a plc to sell shares?

[Cat Ryan]

A share is worth what people are willing to pay. So you have sold one for £1. If you sell another share for £1000 to someone else then the price per share/company valuation at that point is £1000 (per share issued) so you would have made the frist share worth this as well....
On paper of course. And no one would pay it unless they genuinely thought that your company would either give adequate return in the form of dividends or a much higher sales/exit price at a time in the future.
The though to ponder though, if you can grow your company 1000% in a year, and need only £1 investment - why do you let this other person invest? Seems a raw deal for you the entrepreneur. I would just have put in the £1 myself.
To previous poster - no you don't have to be a plc, a private limited company can sell shares too. If you need guidance on business funding then How to fund your buiness by Steve Parks is an excellent read. You can get it on Amazon here: http://www.amazon.co.uk/How-Fund-You...7673059&sr=8-1
Good luck with your business growth

[Tim]

Originally Posted by crewboy25a

Doesnt the company have to be a plc to sell shares?

No, it has to be a plc only to sell shares by public offering