Keeping investors happy is key for the running of any business and meeting with current and prospective investors will end up being a big part of an Entrepreneurs life, but what are the key tips to communicate effectively?
Clearly everyone’s different and managing numerous investors with differing personalities, expectations and requirements is a big job and needs to be taken seriously. An Entrepreneur has to keep investors involved so they feel a part of the business and more likely to support it with future plans.
Here are some tips based on my personal experience both as an Entrepreneur and an Investor.
Always keep the lines of communication open
Investors hate being kept in the dark and not being updated and it’s a pretty basic requirement to let them know what’s happening in a business they’ve put their hard earned cash into.
Send a brief update at least every month with a few key highlights and key metrics and then a fuller report on a Quarterly basis with the financials. A regular flow of information means investors are less likely to drop ad-hoc requests on you which can cause major disruption to the team.
Understand personalities
Depending on their background and experience, some of your investors might be extremely analytical and like to pour over the numbers whilst others might be more interested in the bigger picture, the dynamics of the team and potential over the long term.
Make sure you get to know your investors individually so you can tailor your approach and make sure the information you provide is right for them and will answer the questions they are likely to have.
Share the successes and good news
If you’ve had a great week, signed a new deal, been featured in the press or have had a bunch of great customer reviews then share this. The fact that other people are singing your praises or you’ve hit a key metric is a big positive and drip feeding this type of information on an ad-hoc basis will make your investors feel more involved and positive about the business.
Be honest and don’t hide bad news
Always be honest! Investors can spot it mile off if you’re being disingenuous and being liberal with the truth – and it will always come back to bite you at a later date.
Investors don’t like surprises either so don’t try and conceal bad news. It’s going to come out eventually anyway so just get it out of the way. It’s never as bad as you think and being transparent and upfront from the outset will help build trust and ensure a stronger relationship.
Remember that investors are on your side and want to the company to succeed. They know that companies have ups and downs, especially start-ups and they might just be able to help or provide constructive advice.
Manage expectations
Success doesn’t happen overnight and investors know that especially when they are investing in a tech/e-commerce start-up.
You obviously need to sell the vision and make it sound attractive but you should also be confident that your projections are achievable. Once the investor is on board ensure that you always try to under promise and over deliver. It’s always better to beat forecasts more often than not, than have to explain why the numbers have been missed each month.
Ask for advice and help
Not all investors want to be actively involved in the businesses they invest in so you need to pick and choose who to approach but for many they would be more than happy to help and be pleased to be asked.
A lot of the time investors have been there and done it and have developed and sold successful businesses from scratch. Use their wealth of knowledge and experience as well as their contacts.
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