Why a crisis isn't the time to build investor relationships  

• Establishing investor relationships during a crisis is often an uphill battle.
• Forging ties before a crisis arises and nurturing them after its resolution are crucial steps for your company.
• Being proactive and transparent empowers your business to not only survive crises but emerge stronger.

 

Fostering strong relationships with investors is of prime importance. These relationships are the bedrock of trust and confidence, enabling smoother communication and more effective collaboration.

When a crisis strikes, these pre-established bonds can be the difference between navigating turbulent waters successfully or faltering under pressure. Unfortunately, building these relationships during a crisis is often an uphill battle, making it essential to establish and nurture them well beforehand.

WHY RELATIONSHIPS CAN'T BE BUILT DURING A CRISIS

During a crisis, the focus of investors shifts to immediate concerns such as financial stability, risk management, and crisis resolution. In such a high-stress environment, building new relationships is challenging for several reasons:

• Trust deficit - In times of crisis, trust becomes a scarce commodity. Investors are likely to be sceptical of new relationships, focusing instead on their existing trusted connections.
  
  
• Limited communication - Communication channels during a crisis are often clogged with urgent updates and critical information, leaving little room for relationship-building dialogue. 
  
  
• Heightened emotions - The heightened emotions and stress of a crisis can impair the ability to form new, meaningful connections. Investors are more risk-averse and less likely to invest in unfamiliar relationships.

 Before a crisis emerges, communicate regularly with investors through your website, email.

BUILDING RELATIONSHIPS BEFORE A CRISIS

Establishing robust relationships with investors BEFORE a crisis hits is a pre-emptive approach that pays dividends. Here are key strategies to consider:

1. Communicate regularly

Maintain consistent, transparent communication with investors. Regular updates through your website, emails, newsletters, and briefings keep investors informed and engaged.

2. Engage personally

Engage with investors on a personal level through meetings, calls, and personalised messages. This shows commitment and builds a foundation of trust.

3. Demonstrate reliability

Consistently meet or exceed expectations. Manifesting your company's reliability in stable times assures investors of your capability to handle crises effectively.

4. Offer value-added interactions

Provide value beyond financial returns. Share insights, offer exclusive access to company events, and involve investors in strategic discussions.

5. Build a strong IR team

A dedicated, responsive investor relations team can facilitate ongoing relationship management and address investor concerns promptly.

Size up these concepts for building relationships before a crisis:

• Host quarterly webinars where your CEO and CFO discuss performance, future plans, and answer live questions. This tactical approach builds investor confidence and rapport.
  
  
• Present a detailed risk management plan during your annual general meeting, outlining how you intend to mitigate market volatility and operational risks. This indicates foresight and builds investor trust.
  
  
• Update investors on your corporate social responsibility activities, such as community health programmes and environmental sustainability projects. This engagement highlights your company’s ethical commitments, fostering goodwill and investor loyalty.

Engage with investors personally and offer value-added interactions.

REBUILDING RELATIONSHIPS AFTER A CRISIS

Once a crisis is resolved, it's crucial to rebuild and strengthen investor relationships. Here’s how to approach this phase:

1. Go for transparency

Be transparent about the steps taken to resolve the crisis and the measures in place to prevent future occurrences. This reassures investors of your commitment to stability.

2. Acknowledge and appreciate

Acknowledge the support of investors during the crisis and express genuine appreciation for their patience and loyalty.

3. Restore confidence

Showcase improvements and progress made post-crisis. Highlighting tangible recovery results can restore and enhance investor confidence.

4. Invite open dialogues

Encourage open dialogue and feedback from investors. This can help in addressing any lingering concerns and fostering a sense of inclusion and partnership.

5. Reinforce core values

Reiterate your company’s core values and commitment to long-term growth and stability. This reinforces the alignment of your objectives with investor expectations.

Perhaps these sample scenarios can spur ideas on rebuilding relationships after a crisis:

• Recovering from a cybersecurity breach - You can hold a special investor meeting to present your enhanced security measures and a revised IT strategy. This reassures investors of your company's resilience and dedication to protecting its assets.
  
  
• Pulling through a supply chain disruption - You can issue a comprehensive report detailing the incident, the steps taken to address it, and improvements to your supply chain management. This honesty helps restore investor confidence.
  
  
• Overcoming a major operational setback due to a natural disaster - You can deliver quarterly updates highlighting restored production levels, new safety protocols, and strategic partnerships formed to prevent future disruptions. This progress expresses character and rebuilds investor trust.

Rebuild your investor relationships after the crisis is resolved.

Simply put

Relationships are the glue that holds trust and collaboration together in the investment world. Building these relationships before a crisis arises and nurturing them after its resolution are crucial steps for any company. Being proactive, transparent, and committed empowers your company to not only survive crises but emerge stronger, with investor relationships that are more resilient and robust. 

Don’t wait for a crisis to start

With IRM Newsroom, you’ll communicate with your investors directly and smoothly – before, during and after a crisis. It’s the news delivery app many listed companies trust to send news straight to their inboxes, soon as they are released from the ASX.

We can also set up your website to make it investor-focused and easy to update. Find out more on +61 2 8705 5444 or clientrelations@irmau.com.