- A Guide to Better Investor Communications
One of the greatest issues that seasoned investors see, which is also something they also struggled with as young entrepreneurs is how to communicate with existing investors.
It is easy for young entrepreneurs to forget all about investors until they need more money. Unfortunately, that’s the worst time possible to approach them again. Investors don’t like the idea of being viewed as ATMs.
The most suitable approach is do it early and often like the old Chicago voting adage.
Talk to Investors Early and Often. Create a process for communicating informally once monthly and more formally once every quarter. Investor communications are best delivered via writing, either through email or regular mail. The monthly report sent to investors should ideally be a page or two and may include Profit and Loss (P&L) information. You should include detailed financial information in a more substantial quarterly report.
In person meetings and phone calls can be beneficial too. Consider scheduling brainstorming sessions or semi-annual meetings with investors, either via conference calls or in person. Investors love giving advice and pulling together a lot of brainpower is always a good thing.
Keep in mind that you do not have to do everything yourself.
Investors have a stake in your success and would like to help. Their experience provides great insight and their connections can help your business grow and provide more resources. Ensure that your investors are kept in the loop and discuss both your challenges and successes.
Honest and consistent investor communication offers 5 main advantages:
– Promotes continuous evaluation of your business model and company on a quarterly and monthly basis.
– Forces you to be accountable to investors and yourself too.
– A documented history of the performance of the company and a strong record of investor communication will help attract new investors according to EMR.
– Strong investor relations increase the chances of investors identifying potential areas of partnership, growth, or even new business angles.
– If you act like a big business you will become a big business. Investor relations and reporting and critical infrastructure components for larger companies and you need to start developing this infrastructure early on.
The most important thing is to ensure that you keep communications and conversations with investors honest. It is important to avoid sugarcoating the truth. If you consistently talk to investors, they will be readier to help, even when the going gets tough.
What do you believe are some of the key challenges and benefits to investor communication?