Listing on the stock market used to be the ultimate goal for many owners of small businesses. Build a company from scratch, prove its business model, then float on the public markets.

But in recent years listing has fallen out of fashion. The number of companies registered on AIM, London’s junior stock market, has fallen every year since 2007, and stood at 959 at the end of September. At its 2007 peak, AIM was home to 1,694 small and medium-sized companies.

There are still many benefits to going public, including access to capital through a wider range of investors and an increased profile.

To list, a company needs to issue a pre-application announcement, appoint a nominated adviser and prepare an admission document. It’s not cheap, with the total bill often exceeding £300,000. An additional application fee is often payable upon listing.

Yet it can still be the right option for some companies. “There are clear advantages to having a public price for your shares,” said Patrick Birley, chief executive of Nex Exchange, a rival to AIM, which counts Arsenal football club and brewer Shepherd Neame among its constituents. “It’s easier to incentivise management. It makes an exit process much more straightforward.”

Despite these potential rewards, public listings among small companies have continued to drop in recent years.

Experts point to several reasons for the decline. Whereas a listing used to be one of a small number of ways for companies to raise finance, now there is a multitude. In particular, the rise of crowdfunding and peer-to-peer lending has delayed the float plans of a number of private companies. Last year, companies on AIM raised £4.8bn, compared with £16.2bn 10 years ago.

Another explanation is the return to the market of private equity cash after the financial crash.

“It’s easy to see the attraction of private equity,” said Birley. “You have a single party making a single decision to inject capital.”