The potential returns listed by each company are NOT promises.  There are no guaranteed returns.  However, if a company is successful and does generate returns for you, here are some examples of ways you can see returns from small business or start-up investing:

Sale of the Company

Many successful small business and start-ups are purchased by other companies once they reach a certain size and amount of success.  This could be another company that acts as one large investor, like a private equity firm or a venture capital firm.  However, its most likely that it will be a larger corporation in the same industry, interested in protecting their dominance or improving their product offering, the reasons Google decided to buy Youtube.  In a sale scenario, a larger corporation would come to the leaders (Board of Directors) of the company with an interest to buy them.  This might include an offer.  The leaders would then call a shareholders meeting to discuss this offer, and may attempt to negotiate a more favourable price.  If a purchase price is agreed, a price per share would be calculated, and each shareholder would be required to sell their shares at the price per share as outlined in the sale agreement.  

In this scenario, your return is are the difference between the price you paid for the stock initially and the price at which you sell it to the acquiring company.  

Please note: some sale agreements require the debts of the small business to be paid off first, and the price per share to be reduced accordingly.  

Initial Public Offering (IPO)

Many successful startups decide to ‘go public’ once they reach a large amount of success and growth.  Going public refers to taking the company public and listing the company on a stock exchange.  After this point, the company will be a public company, and the shares will be able to be freely traded on a stock market. Often, companies consider going public after they reach between $50 million and $250 million in annual revenue.  If the company does decide to go public, they will work closely with an investment bank to help them determine the price at which to offer the shares in their ‘initial public offering’ (the first time they offer their shares to the public), and to help prepare all the necessary reporting and paperwork.  Public companies have many more reporting and legal requirements than private ones, including providing audited financial statements, so going public can be a large financial cost for companies.  As part of going public, the company will most likely retire the shares you own and either buy them back from you as part of the transaction, or convert your shares to the new publicly traded ones.  Converting your shares now allows you to openly sell your shares on the stock market whenever you chose.

In this scenario, your return is the difference in price between what you paid for the stock initially and the price of the stock on the market when you decide to sell.  

Dividends

The easiest way for a private company to provide returns to its investors is by issuing dividends.  A dividend is the term for any money paid out from the company to its shareholders.  Paying a dividend does not result in you returning your shares to the company; you still own all of your shares after a dividend is paid.  A company can decide to pay a dividend any time provided doing so doesn’t prejudice the position of others like creditors.  Companies usually begin paying dividends only when the company is strong and stable, the dividend will not put the company at any financial risk and the company can pursue its business plans without need of the funds paid out.  The amount and timing of dividends can be dependent on the type of stock you hold.  Some companies issue preferred shares that give their holder the right to receive dividends before other shareholders, or access to a larger share of the dividends.  Holders of common stock are not entitled to dividends until the company declares them.  In a company with only common shareholders, each share will receive the same amount of dividend, calculated as a dividend per share. In that situation, your return from that dividend would be equal to the number of shares you own multiplied by the dividend per share of all eligible shares.  

Many companies plan to simply pay dividends once they are successful, and provide their investors with a consistent return while still allowing them to keep their shares and the value of their initial investment (principal).