Question: I have a few investors in my startup and am having some difficulty discussing tough topics like financial challenges and strategy shifts with them. Could you share some insight on how to build trust and open communication with investors, especially when discussing tough topics?
I always tell entrepreneurs that landing an investor is more than just landing funding. Most investor relationships last far beyond the timeline it takes to spend the money that was originally invested, which is why it’s important to take on investors you feel comfortable having honest conversations with and that you feel will be a good partner during the highs and the lows of your business. In the unpredictable journey of scaling a business, challenging conversations are par for the course, especially when they involve your investors. Navigating these discussions early on will likely feel daunting, but with the right set of ground rules and preparation for those tough conversations, you can help facilitate dialogue that becomes a source of inspiration and support.
Here are a few ways that I’ve learned to set the stage for productive and comfortable conversations about tough topics with my past investors:
1. Set the Stage for Transparency
Transparency is the foundation of any successful business relationship. From the outset, establish a culture of open communication with your investors. Sharing both the highs and lows of your business journey lays the groundwork for discussions that address challenges candidly. If for some reason you’re uncomfortable doing so, challenge yourself to have a vulnerable and honest conversation with your investor about what you may need to foster a supportive forum for having these conversations – even if that means hosting a monthly or quarterly meeting dedicated to discussing challenges so that the expectations around the type of content are known in advance and welcomed as part of the intended agenda.
2. Prepare Ahead of Time
Approach challenging conversations with a well-considered plan. List the key points you want to address, anticipate potential objections or concerns, and prepare yourself with well-thought-out responses. Preparation not only boosts your confidence but also ensures a more productive discussion.
Difficult conversations often stem from challenges or differences in opinion. Address these concerns head-on. Explain your rationale behind your decisions, detail the strategies you’re implementing to mitigate issues, and provide a clear vision of how you plan to move forward.
3. Approach the Conversation as a Collaborator
Remember that both you and your investor share a common goal: the success of your venture. Treat these conversations as collaborative problem-solving sessions. Invite your investor’s perspective and demonstrate your willingness to work together toward shared objectives.
Don’t just focus on getting your message across; listen actively to what your investor has to say. Ask clarifying questions, show genuine interest in their viewpoint, and acknowledge their concerns. Active listening fosters an environment of mutual respect.
Rather than getting caught in a blame game, channel your energy into finding solutions. Shift the conversation’s focus from problems to actionable steps that lead to progress. This proactive attitude reflects your commitment to growth and improvement.
4. Follow Up with Action Steps
After the conversation, send a follow-up email summarizing the discussed points and the agreed-upon action items. This not only reinforces your commitment to moving forward but also provides a written record for both parties to reference.
“Conversations with investors, no matter how challenging, are opportunities to strengthen your business relationships.” – Nancy Twine
By approaching these discussions with transparency, preparation, and a solution-oriented mindset, you can create a foundation for more meaningful conversations.
Embrace each difficult conversation as an opportunity for personal and professional growth. Reflect on the outcomes of past discussions to refine your approach. Over time, you’ll develop a skill set that enables you to navigate challenging conversations more confidently.
