Working with investors

You have done the deal and sold an equity stake in your business to provide finance for increased growth. Now you have to learn to work with your investors to ensure that the company continues to succeed. This guide will show you how to maintain a positive working relationship with your investors. This guide introduces you to:

  • Sticking to the contract
  • Working professionally with your investor
  • Active or passive

Sticking to the contract

When bringing on board outside investors you need to negotiate terms which you are comfortable with and which will not damage any future working relationship. You must agree on the nature of your relationship at this stage e.g. ask them what information they will require and how often, in what format and provided to them by which member of your business. Get them to tell you what areas in the business they will expect to have an input on such as appointments, pay decisions or new product/service development.

  • Find out at the earliest stage possible what the investor will expect you to do

Working professionally with your investor

You must develop trust in your relationship with your investors most vitally in the early stages. You must effectively manage all the expectations they had at the time of their investment. You must be honest with them about any bad news affecting the business and be realistic when providing financial forecasts. It is important to develop personal communications with the investor so  try and keep in contact and provide information over the telephone or at face-to-face meetings rather than on e-mail. This will help give them confidence in you from the outset.

  • Deliver on the agreements you made in the contract
  • Build a strong personal relationship with the investor to build trust

Active or passive?

Investors can either be active or passive. Some will want detailed information of cashflow, profit&loss figures and your thoughts on the business's progress on goals and budgets. Some will sit on the sidelines and not get involved at all. Most will want to receive regular financial reports and monthly accounts. You must react well to all these eventualities. You should watch out for too much interference from investors in the forms of constant telephone calls and continued questioning of decisions. You have to be assertive at these times and stick to your thoughts and decisions if you believe they are right. Conversely you may be disappointed by the lack of assistance from investors who prefer to just sit back and let you run the business without any input at all. By building a personable relationship you will be able to put your concerns over without causing any discontent.

  • Be assertive and tell the investor if you feel they are not behaving appropriately

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