Business Relationships: Tips for Dealing with Your Investors

Aside from your customers, the most important people involved with your business are your investors, and your relationship with them is very important. Handle it right, and your business will be very profitable. If you handle this relationship poorly, well...

Relationships win business – and when it comes to updating investors who are the backbone of your small business, you need to keep them happy. This is true no matter who the investors are bankers, credit unions, an investors group or even friends and family.

Some business owners don’t bother to stay in touch with their investors and this is a big mistake. They get so wrapped up in their day-to-day activities that they forget to update their investors.

Cultivating a smooth relationship your business investors can boost your bottom line – so don’t neglect them.

Here are some strategies that can help you improve your relationship with investors:

  • Make documentation available – Investors need to be able to get forms from traditional equity holders, key employees, professional venture capitalists, bank loan officers and advisers.
  • Increase their involvement – Investors can get involved in all the company’s activities and experience the industry as if they were helping to run the business.
  • Stay on top of legal matters – Investors should always be updated on all legal and competitive issues.

Private organizations have responded well to a survey conducted by the Chicago based law firm Foley and Lardner. SOX regulations project to the investors a transparent and well-managed picture of the company. SOX regulations do not apply to private companies. Here are a few things that you should consider doing to develop a mutually beneficial business relationship with your company’s investors.

  1. Keep your operational details out of your investor’s involvement. Your investors would have launched their own company if they wanted to be involved into the operational details. Provide these details only if asked.
  2. Know your financial structure well. This does not mean you have to be a financial wizard. However, you should be knowledgeable enough to discuss your company’s financial status, including your cash flow, growth projections, servicing debt and so forth.
  3. Try to avoid the investors speaking about the company with anyone other than your company spokesperson (probably you). Every company should have a contact person authorized to deal with the investors.
  4. Never try to withhold any information or to sugarcoat bad news. Your investors are not new in your field of business, so they don’t expect a smooth ride all the time. When they have questions, don’t keep them on hold and be timely with the delivery of either good or bad news.
  5. When displaying your projections, be a bit conservative. You can talk about the numbers projected in the last or current quarter, but avoid forecasting or bluffing. Don’t make false promises and avoid exaggerating. When it comes to financial information, be forthright, but make sure you don’t overpromise.
  6. It takes only little effort to channelize your website for investors to visit. Via your company website you can post insider news, K-1 filings, financial statements, sales agreements and much more. Investors usually like it when they have easy access to information.
  7. Investors generally make the decision to invest by evaluating business plans and markets, but this decision can also be based on business management. Try and be yourself, as it is your ability and skill that leads the company towards growth and this indirectly projects your worth.

Lastly think of the investors as your potential partners and not as on-guard critics. Enjoy their support and experience.

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