Successful companies understand the importance of using “best practices.” This term refers to methods and services commonly considered to be the best options within an industry. By adhering to best practices, companies are able to successfully compete in their market sectors and, ultimately, establish themselves as leaders in their respective fields.
At times, regulatory bodies or agencies may set the standard that defines best practices for an industry. When such regulations are not in place, best practice standards can vary greatly.
However, when it comes to investor relations, the standard for best practices holds true no matter what industry your company operates in, and these best practices should always be applied. They include:
Honesty truly is the best policy, and it is unquestionably a best practice when it comes to investor relations. Base your communications on the current state of your company, whether it is good or bad. If investors sense you are hiding something, the relationships you’ve spent so much time and effort developing can be irreparably damaged.
Even when there is bad news to be told, you can still generate a positive response by announcing it in the right way. Don’t wait and allow another organization to tell your negative news; doing so can be disastrous for your company. Get out in front of it and be the first to report it.
Visibility and Transparency
When there is bad news to be told, communication problems frequently ensue because companies are worried about negative feedback from their investors. It is crucial that your company is completely transparent in such situations. Your communication with investors should always be open and honest, reassuring them by relating facts about how your team is handling the situation. When your company takes a proactive approach during difficult times, it can mitigate the potential fallout.
Any message being created for your investors must be carefully prepared and meticulously reviewed before it is disseminated. This holds true for any type of communication, from press releases to social media updates. As you prepare, try to anticipate any questions that may arise once your message hits, and be ready with honest, comprehensive responses.
These three best practices form the foundation of effective investor communication. Of course, you will need to focus on a variety of other essentials in order to provide relevant information and address any risks (particularly those that may result from the communication of bad news).
SmallCapRelations can help you navigate these at times treacherous waters by helping you develop the right communication strategy. Our team will conduct an audit of your current approach and your ability to manage a corporate crisis. We will work with your senior management to enhance your investor communication strategy and determine how these essential best practices apply to your chosen approach.