For small to medium businesses, managing relationships with investors can be complicated. There’s a reason major corporations have entire departments for the job.
If you’re the owner of a business with investors, you may have asked yourself: What is investor relations? What do investor relations departments do? And how can I manage investor relations in my own company?
At Savvy Esquires, we specialize in providing transparent, affordable legal services to startups and small businesses. Part of that commitment means providing free, educational resources to help you and your team understand the complex legal side of running a business.
Contact us to schedule a consultation, and keep reading for more information about investor relations.
What is Investor Relations?
If your company has investors, you’ll need to regularly provide information, updates, and data to them. Investor relations is the practice of communicating this information with investors.
The information you provide, the way you provide it, and the strength of the relationship a company has with its investors matters because they can all influence the investor's decision to continue investing in your company.
What do Investor Relations Departments do?
Investor relations departments gather and report on information regarding the business’s affairs. For this reason, they must be fully integrated with multiple aspects of a business, including their legal, accounting, and management teams.
The different types of information the investor relations departments convey are as follows:
- Regular financial updates and documents
- Personel updates and changes
- Information on compliance and regulatory requirements
- Product and service development updates
- Customer or client feedback
- Projections, goals, and plans
The investor relations department not only communicates with existing investors but also prospective ones. They manage all the necessary documents and communications between the business and the investor’s representatives.
Some of the documents an investor relations department might send to a prospective investor are as follows:
- An elevator pitch
- Business plans and budgets
- Financial statements
- Resumes or references of business owners and team members
- Detailed product and service information
- Contracts or agreements
In addition to this, investor relations may also work with PR team members to manage and report on the reputation of the company.
6 Ways To Manage Investor Relations without an IR Department
1. Prove liquidity. When comprising your reports, be sure to include proof that your business has the liquidity to pay off any debt to the investors. This will help them feel safe investing in you.
2. Focus on valuation. It’s important to give investors a fair valuation of your company.
3. Show your access to capital. This will show the investors that your business is able to grow.
4. Discuss goals with private investors. This will allow you to tailor your reports and updates to prove their investment in your company is beneficial for them.
5. Prove you’re meeting your targets. Demonstrate how you’ve met or exceeded previous goals. This will build trust so when you claim you’re going to achieve something, investors are more likely to believe you.
6. Hire a professional. You may not need an entire department to manage your investor relations. For small businesses and startups, a consultant or contractor can ensure you’re putting your best foot forward.
Investor Relations for Start-Ups and Small Businesses
That concludes our guide to managing investor relations for small businesses and start-ups. For public companies, having strong relationships with your investors can make or break your business. It’s critically important to get it right.
At Savvy Esquires, we have years of experience providing affordable, professional legal services to entrepreneurs, creatives, start-ups, and other small businesses. Our services are streamlined and transparent, so you know exactly how much you’re paying and what you’re paying for.
Contact our team to schedule a consultation. We’re ready to support you with our affordable, quality legal services.