6 tips for talking to shareholders

Your shareholders keep your business afloat, so don’t neglect them. Regular and transparent communication can help your shareholders feel connected to both you and your company.

Once you take your company public, your shareholders become your bosses, at least in part. Shareholders want to know what’s going on in your company, and they have a legal right to know. It’s your job to ensure that they are satisfied with how and how often you communicate with them. There are a few ways you can communicate with shareholders:

Here are some tips for getting the most out of talking to shareholders.

1. ALWAYS Be Transparent. Gone are the days when companies could sweep the dirt under the rug. With the average citizen able to upload news as it happens, through the likes of Twitter, blogs and other social channels, if you don’t tell your shareholders bad news, they’ll hear it from another source. And it’s always better coming from you.

Toyota is a brand that has failed recently in being transparent. It knew there were issues with some of its parts, but rather than issue a recall immediately, the company waited until people had accidents. The company will spend years trying to build back its reputation, and its stock has taken a hit. Remember that bad news spreads virally online, so do not withhold anything from your shareholders.

2. Talk, Even When Nothing’s Going On. You don’t have to wait to talk to shareholders until there is particularly good or bad news. Shareholders appreciate updates even when nothing special is happening. Consider sending out a monthly or quarterly email newsletter that informs shareholders of initiatives that the company is working on, and the direction you’d like to go in the future.

3. Use Multiple Formats for Communication. Not all shareholders will attend your annual meeting, so make sure to offer many ways to communicate news to them. Email, snail mail, webinars, phone calls, social media...these are all ways that ensure that your company reaches every last shareholder through his/her preferred method of communication.

Tip: Work to answer the most frequently asked questions publicly, to avoid getting dozens of emails asking the same thing. Post the answers to your blog and on social media, so that at least when people email you, you can refer them to the post.

4. Step Into the 21st Century. While you’ve been mailing shareholder letters for decades, it’s time to look at more tech-savvy means of communicating. Twitter is a great platform, as you can send out short updates to not only shareholders, but also potential customers. Facebook, your website and your blog are also good channels for updates that don’t cost much (if anything) and let you update frequently. Also, press releases are still relevant, and with today’s online distribution channels, you send your news the moment it happens.

5. Don’t Fear Your Competitors. On quarterly earnings calls, many companies are afraid that their competitors are listening. Don’t be afraid. If they’re listening, that just means they don’t have any ideas of their own and want to copy your business because it is so successful. You’ll always have competition; nothing can change that. Instead, focus on internal processes that help your company stay number one in your industry.

6. Don’t Listen to Legal (at least in this case). Many businesses have legal departments that try to ban mention of just about everything except “hello.” While you shouldn’t mention any trade secrets or anger your lawyers too much, don’t let them restrict you to the point of creating worthless dialogue. Give your shareholders something to sink their teeth into; give them a reason to continue to support you through the purchase of your stock.

6. Don’t Listen to Legal (at least in this case). Many businesses have legal departments that try to ban mention of just about everything except “hello.” While you shouldn’t mention any trade secrets or anger your lawyers too much, don’t let them restrict you to the point of creating worthless dialogue. Give your shareholders something to sink their teeth into; give them a reason to continue to support you through the purchase of your stock.

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