When you dream of running your own company, many of us likely dream that you can afford to open and operate our company without any help or outside funding. The truth is, unless the company you are starting has a low operating cost or you have some savings to put towards opening our company, you will need to drum up funding to start and operate our company until the revenues cover your business operations wholly.
There are numerous choices for financing your small company, but the choice that gains the most startup funding is investors and stockholders. In other words, those who will invest in your company will get back their investment through profits, but once their initial funding is paid back, they will continue to get a piece of the revenue. This share in the revenues means these stockholders also share in risks and consequently need to be kept apprised of its operations. Here are six ways to keep your investors and stockholders content while you grow.
Communication
Communication is crucial to any relationship you have in your life, whether company or personal. Your Stockholders will want to see tangible results; however, while your company is developing and growing, you will require great communication with your shareholders. Keep them up-to-date on development and changes in projections. Even if there are downturns in the company, don’t hide this from your investors and Stockholders. They need to know the reality. This communication, particularly when it comes to slumps, could create more funding if investing more will spark growth and revenue.
Treat your investors and stockholders like anyone else who has a vested interest in you and communicate openly and often.
Listen to Concerns
In the world of business investment, it is rare to have partners who put money in your company and stay out of the operations. Most investors and stockholders will want a say in the object of their investment. As a company owner, you should take their feedback and ideas seriously and listen to their ideas and concerns.
Though some ideas may be unreasonable, most investors and stockholders are company savvy and have the experience that you, as a new company owner, have yet to know or experience. Remember, they have a stake in the company’s success, so every idea or suggestion they give you is with the company’s best interest at heart.
Manage Expectations
Before you communicate successfully or actively listen to your investor and shareholder’s ideas, you must manage their expectations. If you have a well-written company plan, the company outlooks should be controlled for the most part. However, you should make sure the outlooks are set at a range of high expectations to lower ones. While confidence will never be gained by presenting worst-case scenarios, setting their expectations in the middle on the lower end will give you space for some lesser desired results.
We all set expectations on every aspect of life in our personal and company lives. It is important that as a company owner, you set reasonable expectations for your investors and Stockholders.
Show Leadership
Investors and Stockholders in a company are generally confident and strong leaders in their sphere of influence. When someone invests in your company, they aren’t just investing in operations and startup costs. They are investing in you. While profit projections and company potential may have heavily influenced their decision, seeing you as a strong leader and your potential is likely what had them saying, “take my money!”
Investors and Stockholders aren’t the only reason you should show strong leadership. Your staff and customers need to see you as a strong leader to get your company’s most successful results.
Set Goals
Before you even have your grand opening, you should consider and set service goals and expectations when your company starts. These service goals and expectations may need to be changed. It would be best to meet with your investors and Stockholders to discuss what these service levels should be, and an agreement should be put under contract.
Service level agreements are standard practice in companies that have investors and Stockholders. The advantage to the shareholder is that they will know that you are striving to meet this goal and give them peace of mind. As an owner, the benefit to you is that an investor can’t move the line or push for higher service levels, which shields you and your staff from arbitrary goals.
Understand Investors
The greatest thing you can do for your investors and stockholders is to understand they are people just like you. They are not on some other plane because they have money to invest in your company or maybe more company savvy from experience. They are a person that is looking to make strong investments and who wants to see success and growth.
Investors and stockholders are not different from you, so don’t treat them as though they are. Use the golden rule with some company modifications, treat and inform your investors like you want to be treated or informed.
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