The Biggest Investor Relations Mistake Small Cap Companies Make

If you’re sitting at the helm of a small or midcap company, you may be doing what you can to cultivate a strong relationship with investors. This requires a lot of planning as well as thoughtful execution.This is where small cap investor relations firms come in. These firms have the expertise and extensive network you’ll need to make the most of your relationships and interactions with investors. They will help you design and implement an investor relations (IR) program that will help you build and maintain as strong relationship with investors.

The biggest IR mistake you might be making :-  Despite hiring professional investor relations services, many small and midcap companies make mistakes that can easily destroy what would have been successful IR programs. One of the biggest mistakes these firms make is not disclosing bad news to their investors in a timely and relevant fashion and in a way that also says “we understand what caused these bad results and we have a tangible plan to fix them.”

CEOs and CFOs are just as human as the rest of us. They have the desire to show their companies in the best light possible. No one likes to share bad news with investors. After all, this may cause them to sell the stock and could hamper management credibility going forward.   Unfortunately, this cycle can be hard to break and often has long-lasting impacts on the stock’s multiple. With this belief in mind, management may choose to sit in silence on problems that have been developing over time. They may avoid communicating them until the problems escalate and it’s already too late.

A culture of transparency :-  If your company is faced with an issue, it is best to address the issue as soon as it is identified. It doesn’t matter whether things are going to plan or not. Don’t try to hide the truth or deny it. Let investors know what is happening. Be honest about it. They may provide you with a solution that you may not have thought of.

There’s a good chance that your investors will be supportive of your company if you are transparent about issues. Investors understand the realities of running a business and won’t expect your company to do well always. Just be sure to communicate any issues in a timely manner.