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The Entrepreneur's Ultimate Tip List for Communicating With Investors The following tips will help you to dominate investor communication -- an area in which many entrepreneurs lack a solid understanding.

By Neil Patel

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

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Entrepreneurs have a lot to worry about -- marketing, hiring, productivity, funding, development, R&D and communication, among a thousand other things.

Communication with investors is one of the areas in which many entrepreneurs lack a solid understanding. Your investors are the ones who are making it financially possible for you to work your passion and build your legacy. But there are a host of legal considerations to keep in mind, especially if your company goes public.

The following tips will help you to dominate investor communication.

Schedule meetings.

This is the first nonnegotiable. Sit down with your calendar and mark out all the times that you're going to meet in the upcoming year.

Quarterly meetings are traditional and important, but as Mark Suster advises in Business Insider, "quarterly is too few for an early-stage business." Holding meetings every five to six weeks is better for providing information and getting feedback. Be sure to schedule virtual as well as in-person meetings.

You can't over communicate. More communication is always going to be better than too little communication.

Related: The 6 Secrets to Getting Mentored by the Best in the Business

Answer all their questions.

Your investors will have questions. Answer them completely and thoroughly. Their questions indicate their interest in the success of the company. Furthermore, their questions will help you know where and how to focus your own efforts.

Be transparent. Tell them everything. You can't go wrong by explaining your challenges, your screwups, and your plans.

Ask your own questions.

Communication is never a one-way street. Even though you've founded the company and are doing all the grunt work, this does not mean that you need to do all the talking.

Use your investors as sounding boards, advice providers, mentors and counselors. Investor Mark Solon describes how venture capitalists view their role:

The overwhelming majority of VCs I've worked with get up in the morning and think about how they're going to help their portfolio companies that day. They build close and often times personal relationships with the management teams that they work with and their input is both welcomed and appreciated by the entrepreneurs who they work with.

Do you view your investors in the same way that they view themselves? Sure, all investors differ in approach and manner, but if they're willing to plunk down their cash to help you start a company, then they have a definite interest in helping that company.

Your investors want to help. But unless you ask, they won't know how. Go ahead and ask, and you'll gain something that is even more important than their investment dollars.

You do the communication.

As an effective entrepreneur, you need to guard your time and focus on your core competencies.

Should you outsource investor communications? Nope. You shouldn't. Your investors want to hear from you, so keep them in the know.

Hold conference calls.

Conference calls may be inconvenient, but they remain an optimal way to get everyone together to talk through issues.

Don't let the conference calls descend into a jumbled conversation. Lead off with an agenda, and accept questions at the end.

Entrepreneur Patrick Hull advises the use of scripts. "One tactic that helps make the calls worthwhile is to create a script before so that I hit every point that I want to touch on."

Related: 10 Straightforward Techniques That Can Boost Your Personal Credibility

Also schedule one-on-one calls.

One-on-one calls are a must have. Quarterly reports and formal meetings are fine and good. They fulfill a purpose.

What these meetings can't do, however, is provide the personal feedback and knowledge of your investors. This happens during the times where you pick up the phone and talk to a single investor.

You may not even need an agenda. While not wasting your investor's time, it's helpful simply to talk, provide a brief update, ask for advice, or just see if he or she has any questions about the business.

Send reports every month.

Some investors are going to watch your numbers as if it they were watching their personal bank accounts. Some investors won't really care.

Your responsibility is to cater to the investors who care. Prepare and send monthly P&Ls so your investors understand exactly where and how money is flowing.

Seasoned investors can read a P&L like you can read a novel. They understand every plot twist, character development, and foreshadowing. They'll spot the danger signs long before you do, and provide you with the information you need to stay strong.

A solid method for formatting your monthly P&L is to put a one-page snapshot at the front to satisfy the marginally curious investor. Then, include a detailed and comprehensive report for the deeply interested and heavily invested to peruse.

Use social media with caution.

There are certain unwritten rules surrounding the use of social media with shareholders. The tough thing is, no one knows those rules. Plus, the rules are always changing.

First, take a look at the data. According to webinar polls from Inside Investor Relations, investors have a mixed view of social media. One third of the respondents consider Facebook and Twitter to be a useful place for investment-related communication. That leaves a silent two-thirds who are presumably not in favor.

How many investors are actually using social media for investor communication purposes? Only 22 percent, according to a 2010 report. The report uses the term "cagey" to describe investors' attitudes toward social media.

As an entrepreneur, you'll need to understand the cultural temperature of your particular shareholders. Attitudes toward social media differ among various industries and demographics. Adjust your approach accordingly.

Conclusion

Part of your role as an entrepreneur is to be an effective communicator with your investors. This is a group of people that matters deeply. You owe it to them to communicate as openly, frequently, and effectively as possible.

What is your investor communication strategy?

Related: 9 Things True Thought Leaders Always Do

Neil Patel

Entrepreneur and Online Marketing Expert

Neil Patel is co-founder of Crazy EggHello Bar and KISSmetrics. He helps companies like Amazon, NBC, GM, HP and Viacom grow their revenue. 

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