Keep your stakeholders informed! Many early-stage entrepreneurs lose sight of the importance of keeping their investors, shareholders, advisors, and even directors (really – I’ve seen it happen!) updated on the state of the business on a regular basis.
One of the companies I am a stakeholder in is Baydin, and Baydin’s CEO is the inimitable Alex Moore. I first met Alex when Baydin applied to the inaugural class of TechStars Boston in 2009. He was easy to be impressed with, and as he progressed through TechStars – and now years beyond – his mad-skillz have continued to shine brighter and brighter. Hopefully he’s blushing now :-) . Because Alex does such a great job of it, and with his permission, I used his updates as a guide to build a template and to share advice on what sharp entrepreneurs might want to do vis-a-vis keeping their stakeholders clued-in.
Why should you keep stakeholders informed?
You want to share information with your stakeholders so they can help you. Help is good! You always can leverage help! If your stakeholders know what’s going on, they can help you steer the ship, maybe help it move faster, or maybe keep you from ramming an iceberg!
Which stakeholders should you keep informed?
Well, that is of course entirely up to you, dear CEO. Some of your investors may have “information rights”, so they would likely be recipients of regular updates. Certainly your Board of Directors are candidates as well. Your co-founders and large-shareholder employees may also be on the list. Perhaps any advisors to your company you feel could be helpful reacting to the information. Your attorneys and bankers may be part of the distribution. Really, it’s up to you to sort this out. Be careful to include people who deserve to know this info (legally or ethically) and be careful not to share too arbitrarily (“loose lips sink ships” and all that jazz).
Note that this article uses the word “stakeholder” rather than “shareholder” on purpose, as some stakeholders may not be shareholders, and some shareholders may not need the information we’re talking about.
How often should you update stakeholders?
In my experience, this is driven by (a) legal requirements and/or (b) company stage. If you have raised debt, you may have certain covenants on your note(s) that require sharing data regularly with your lender(s). As mentioned above, some or all of your investors may have varying legal “information rights” that require you to share data. For most folks though, your frequency of updates should be a function of your stage and/or stability. You probably don’t want to do full-bore updates every week, as it’s just too damn time consuming. Maybe you should share some automated daily or weekly reports about your KPIs, but nothing that you have to put together hyper-manually. If you measure your runway in years, updates every other month or quarterly should probably be adequate. If you measure your runway in months, every other month or monthly might be more proper. if you’re going through a big rough patch, err on the side of monthly. Like many things in business, there’s a potential win in under-promising and over-delivering. Whatever you do, don’t promise weekly updates and deliver quarterly updates, duh.
What should I share with my stakeholders?
Glad you asked! This was the proverbial piece of sand that incited this pearl of a missive. Here and below you can link to a Google Doc presentation that contains what I think is appropriate for a periodic update from an early stage company. There are NOTES on each slide that explain what is supposed to be in there and what things (hopefully) mean. I’ll leave you in the gdoc, as my work is done here (for now!).
If you have any comments, questions, gripes, etc., please LMK! Happy to cycle on this thing in the interest of receiving and generating better updates!
Special thanks to Steve Kane and Chris Heidelberger who helped me through an uber-annoying brain fart I experienced while writing this, and to Leon Noel who provided feedback as I ‘genericized’ the template. Extra-special thanks, of course, to Alex Moore (roll tide!).