Are you keeping your investors in the loop? A brief article in Australia’s Startup Smart discussed the annoyance and frustration of investors in not having regular contact with the founders of their investee companies. Most startups don’t need to write formal reports to investors, but some of them – particularly when they obtain serious funding – do.

Growing up with advertising and marketing communications around us everywhere has made it seem as though all company communication should be good or at least a story about pushing back during times of adversity.

This can leave founders – particularly those who come from finance or technology backgrounds – at sea as to what to say to their investors.

They know they have to provide an objective view of the company’s health, because even if it’s not a listed company, they still rely on goodwill from stakeholders, and goodwill doesn’t come out of thin air.

Making progress but not talking about it?

Even companies that are doing well will sometimes labour away, making progress but without communicating this progress to the investors and stakeholders. (“What have you been doing all month? Why does that feature matter? Oh, I see, it doubles potential revenue.”)

The problem is compounded when the communication is a written, formal report. I’m an experienced corporate writer, but all formal reports can at times be daunting, for two reasons: a) you’re not sure about every fine detail of the report and don’t want to get it wrong b) you haven’t written anything all your so this report had better be really, really good news c) you’re not a writer (even writers think this often).

Writing an annual report with less pain

With regards to c), I’m here to tell you that you are in fact a writer if you’re writing the report, so just put word after word and you’ll be just fine, even if you stopped paying attention in English class in about Year 11 (high school). Don’t forget how many emails you’ve written over the years, and how many pitches.

Here’s how to address a) and b).

  1. Produce the financial reports- if it’s before the end of the accounting period for the report, just run them anyway and put them in as dummies. Even if they’re different in a few weeks, you’ll be amazed at how not different the eventual accounts are.
  2. Write a set of standard subheadings: Executive Summary, Sales and Marketing, Finance, Risk Management etc. Just put them in for now so you don’t forget to cover off all bases. You can always take them out or modify them later
  3. Write a set of subheadings that correlate to the stuff your investors always seem to be obsessed with. For example ‘New users from XYZ customer group’ or ‘Growth – ABC feature use’. If you are obsessed with something and keep going on about it as a measure of success, you need to include this too.
  4. If you have any images of the product or customers, particularly customers using the product, spend the time to crop them appropriately and include them.
  5. Write the following subheadings: Growth, Unexpected Events and Next Year. Under ‘Growth’, you’re going to write about which things grew in your startup; almost always there is something growing, it’s just that it’s sometimes not the thing you originally wanted to grow – explain why this is a good thing, unless the growth is in the burn rate, then you’ll need to touch on it and move along. Under ‘Unexpected Events’ write about things like why the burn rate blew out, what you did when you had to move premises, what happened when a particular shipment turned up all broken; make sure you let the reader know what you did about it, how you responded professionally. Finally, write ‘Next Year’, and in this write a little (keep it brief in most cases) about how you’re going to operate next year, given the areas of Growth and the Unexpected Events.
  6. Write the subhead ‘Notes To and Forming Part of the Financial Statements.
  7. If you have audited accounts, write the subhead ‘Auditor’. This is where you insert the statement from the auditor saying he or she has audited your accounts. This section can’t go in until the last minute, because the accounts won’t be audited until they’re closed off.
  8. Write the subheading ‘Financial Statements’
  9. Insert all the audited accounts under ‘Financial Statements’. Do not change any of the figures or even try to rearrange them.
  10. Under all the other subheadings (except ‘Executive Summary’), write three to six bullet points on the topic (this is a great way of speed-writing without getting slowed down by needing to be ‘writerly’)
  11. When you’ve finished all the bullet point summaries, put them away for a day or two.

    Time passes…

  12. Then come back and turn each bullet point into one or two sentences. If the sentences turn into paragraphs, that’s okay, just don’t go on and on about a particular topic. If you have a topic that really needs expanding upon, add a subheading at the end of your report called ‘Appendix’, and put that topic and its report in there. Then just refer to it in the original paragraph in the main report.
  13. Take the main thrust of each subheading area and make it into a sentence. Put each one of those sentences into the Executive Summary.
  14. If you have time, give it to someone else to proofread or edit. Even professional writers get their work proofread because it’s too easy to be so close to your own work that you overlook errors.
  15. Call or email us if you get stuck (jenny @ reportmachine.com.au; Twitter @ReportMachine)

 

Reports to investors: how to not stay up all night by

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