9 Tips For Managing Shareholders In Your Company
Shareholders or stockholders own shares of a company’s stock or equity. A shareholder can be a person, a company, or an institution that can reap the benefits of a successful business. Shareholders can gain financial profits through dividends and increased stock valuations. It’s crucial to establish and maintain strong shareholder relations in order to encourage more investors to support and help grow your enterprise.
If you run a company, how do you manage your shareholders? What can you do to nurture and show your appreciation for their efforts and loyalty? Below are some tips to help you in managing shareholders in your company.
- Get To Know Them Better
How many shareholders do you have? Do you know them all by name? If not, then it’s time to step up and become more acquainted with them. When shareholders feel valued in a company, they become motivated to invest more money. And when you’re aware of who they are, you can also increase your trust rating and authority because it goes to show that you know every facet of your business.
- Allow Your Equity To Grow And Go Further
You can manage your shareholders by taking concrete actions to make your equity grow and go further. Using reliable administrative tools and capital-raising legal workflows can make your tasks much easier.
Such tools allow you to send offers to new investors and shareholders, share certificate templates, issue certificates, and a lot more. For instance, cloud technology can help you manage equity that would benefit your stockholders, saving time, effort, and resources.
- Make Information Available To All
Overseas and small shareholders also represent the majority of equity in most companies. Therefore, it’s a must to ensure that every piece of necessary information about the business should be available to all of your shareholders through disclosure and annual reports.
When it comes to shareholder meetings, make sure that each of them is productive and lively. You should send out shareholder meeting notes three weeks from the meeting date. Encourage active participation in votes and discussions. You should present all the facts, predictions, and figures. Be open to suggestions, and change your business strategies based on the inputs of your shareholders to show your openness.
- Be Transparent
Keep stockholder relations strong by being transparent. Never hide any failed strategy or setback. Present the details of the possible reasons your methods failed, and explain how you plan to resolve the problem or recover from the current situation. You need to make sure that shareholders know your business’ failures and successes so you can prove your trustworthiness and accountability.
- Strive To Improve Your Performance
Stockholders aim to grow their investment or profitability, which is their ultimate reason for investing in your company. That’s why you need to do everything you can to improve your performance rather than merely sounding good on paper.
Your efforts should be toward increasing your revenues, reducing costs, and taking your company to the right direction. There’s no need to boast these accomplishments to your shareholders. Simply inform them about the steps you’ve taken and ask for their feedback about what you’re doing.
In addition, you can carry out progressive dividend payments for your shareholders if you see increasing profits. You can set percentage targets and voice out your intentions to increase payouts and profits consistently to promote strong relations.
- Communicate With Your Shareholders Properly
Even if you have the best business strategies, your company’s stock price will stay undervalued if you don’t communicate effectively with your shareholders. Therefore, it’s imperative to let them know what your business strategies are, put words into action, and attain great financial results through proper execution.
You should communicate your business strategies consistently and clearly in all documents, filings, publications, and presentations. The goals of a shareholder communication plan include raising awareness on various investment options available in your company and facilitating capital availability at a lower cost.
- Align Company Interests With Shareholders
It’s important to align company interests with the interests of shareholders to encourage value-friendly behavior and create shareholder value. You need to make strategic decisions that can maximize expected value despite reducing near-term earnings.
It also pays off to regularly monitor whether your investors are willing to pay a premium over your detachable assets such as real estate, brands, and business units. Providing these opportunities can improve shareholder value.
Company executives should address questions such as the following to help align common interests:
- Do your operating units have adequate value creation potential that needs additional capital? Will they provide greater profits for your shareholders?
- What units have restricted potential and should be restructured? And what do they mean for shareholders?
- What combination of investments produces the greatest overall value?
- Provide Proper Compensation Packages
In general, average stockholders aren’t involved in the daily company operations. Shareholders rely on the company’s executives, board of directors, and employees to protect their best interests. Therefore, proper compensation packages should be given to them to help align shareholders’ interests with the goals and interests of the company.
The shareholders elect the board of directors of a corporation to govern and oversee management, making corporate decisions and strategies on their behalf. Hence, the board is responsible for protecting shareholders’ interest.
- Uphold Your Company Vision And Mission
Because of tight business competition, many companies lose track and fail to uphold their vision and mission as well as their guiding principles and core values. You have to keep in mind that your shareholders looked into such matters before they invested in your company. So if they notice that you’re not upholding your promises, they’d likely retract their investments.
Hence, you should keep to your promises, such as giving back to the community through charity work. Show your integrity by being transparent with your reports. Be honest and open to your stockholders and stakeholders. Of course, continue to improve the quality of your products and services.
So how do you plan to attain strong shareholder relations? You can manage shareholders in your company by using the right tools. In addition, if you have an effective stockholder communication plan, you’ll have better control over capital formation. Nurture shareholder relations by being transparent and focused on improving your profitability and overall business performance.