By Antonio A Arias
It’s August and summer R&R is almost over. Capital raising season revs up again in September. For those who have planted seeds since the spring developing relationships with investors, it could mean harvesting new capital soon. If not, it is never too late. So how do you raise your trustworthiness score with investors? With 20+ years involvement in raising capital I have learned these top 3 strategies in building trust with shareholders and prospective investors.
- Sharing your vision and plans
Transparent companies articulate a clear vision and strategy on how it aims to achieve its plans. Publishing its future goals demonstrate confidence, commitment, and accountability to all stakeholders – customers, partners, employees, shareholders. Doing so is like entering into a contract because it is making a public commitment.
To apply this strategy effectively, is to manage stakeholder expectations and contingency plans. Have you factored in sufficient contingencies in case things do not go as planned? For example in recent weeks, certain macro-economic factors can derail plans beyond management’s control. In the technology sector, certain pockets are exhibiting “bubbles” signs. Economic slowdown in China, underscored by recent currency devaluation, and credit uncertainties in Greece have de-stabilized markets. A major market correction could follow causing lower valuations and reduced liquidity.
If a company is operating with a sound system of financial controls and market flexible capital investment plans, investors will feel secure that their investments will be used for expansion instead of being a financial crisis solution.
- Reporting your progress
Being transparent can have a double edge effect. Not everything will go as planned. However, there is nothing worse than a complete information blackout as it can be construed as no news is bad news. When management consistently updates its stakeholders about positive and negative developments, they tend to understand. More importantly, they are interested in how the management has responded to adversities. This is why every proactive management strategy includes a well thought out contingency plan.
Surprises are prevented when driving while watching the operating dashboard. It’s important to establish the key performance indicators (“KPI”) or measure performance against certain benchmarks as soon as possible. What gets measured is managed. Does your company have a customer satisfaction index? How has management responded to customer feedback and competition? How is the sales pipeline growing?
- Let actions speak louder than words
Building trust is not the sole job of the management but it is their job to set up a good example for everyone in the organization to emulate.
What the leaders say in public should be consistent with what they do in private. With today’s social media technology, information travels fast and should be proactively managed. A sound strategy in customer relations, investor relations, is complemented by a strong public relations strategy.
Treat employees like partners. Happy employees deliver happy customer results, impacting the top line revenues. Growing revenues flow through growing earnings and ultimately, growing valuations.
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Antonio is a financial executive, an entrepreneur, and an investor, interested in co-financing and co-developing health-wellness, health tech, and technology enabled businesses, from funding to exit. Serving as a strategic advisor to execute an evidence based plan, he offers interim executive services to businesses designed primarily to enhance their business expansion and financing success.