Protecting Investor Trust Amid Business Uncertainty

In times of business uncertainty, protecting investor trust becomes paramount for any organization. The collapse of Silicon Valley Bank underscores the need for businesses to manage investor trust proactively. The bank's collapse has created shockwaves of uncertainty among the many businesses whose assets are tied up in the failed bank.  

Investors are often critical stakeholders in a company's success, and the confidence they have in an organization's ability to navigate challenges can make or break its future. With that in mind, businesses must take steps to protect investor trust during these difficult times. In this blog post, we'll discuss three strategies that businesses can employ to achieve that objective.

Communicate Transparently and Consistently

During times of uncertainty, investors want to know what's going on and how it will affect their investments. Unfortunately, many organizations are hesitant to communicate bad news to their investors, which can lead to a lack of trust. In fact, it’s been argued that Silicon Valley Bank’s poor communications contributed to its downfall. While poor communications was the "nail in the coffin", SVB's fundamental failure to monitor how quickly stakeholder sentiment was changing ultimately led to the company losing control of investor values and folding. Lesson learned – if you have not been affected by industry changes that could affect your business, then make sure your investors know that. Don't assume they do. Likewise, if you have been affected, be transparent about your exposure's severity rather than hiding it. 

Going back to our original example, the collapse of Silicon Valley Bank created ripples of uncertainty among businesses whose assets are held by the bank. Some of them quickly issued statements publicly re-assuring their customers and stakeholders that their businesses are sound, as these examples show:

•        “Outbrain Issues Statement Regarding the Events Surrounding Silicon Valley Bank” 
•        “Pharming Group issues statement regarding the events surrounding Silicon Valley Bank” 
•        “WalkMe Confirms No Material Exposure to Silicon Valley Bank Shutdown”

The lessons are clear: assume that your stakeholders are thinking the worse and get out in front of their fears and doubts.

It’s critical for companies to be transparent and consistent in their communications, even if it's not positive. For example, if your business is struggling due to a downturn in the economy, be honest about the challenges you face even though you will experience short-term pain. Investors will appreciate your candor and may be more likely to stick with you through difficult times. (Arguably, one of the reasons former Disney CEO Bob Chapek was ousted by his board was that he was too sanguine and came across as tone-deaf as he shared the results of a difficult quarter.) Additionally, consistent communication means providing regular updates on your company's performance and plans for the future. This can help investors feel confident that you're actively working to improve the situation.

In addition to regular updates, consider hosting webinars or conference calls to answer investor questions directly. This can help alleviate any concerns and reassure them that you're taking their investment seriously. The advantage to doing this is that you humanize your brand by having your leadership talk directly to investors. Finally, be sure to use language that's easy to understand. Avoid jargon or technical terms that may be confusing to investors who aren't familiar with your industry.

Reassure Investors of Your Long-Term Strategies

During times of uncertainty, it's easy to focus on short-term survival strategies. However, successful businesses protecting investor trust focus on long-term strategies. This means, among other things, communicating clearly how you are:

•         Investing in research and development.
•        Diversifying your product or service offerings.
•          Building a strong team. 

Investing in research and development can help your organization stay ahead of the curve and develop innovative solutions to challenges that arise. This can lead to increased market share and revenue growth over time. 

Diversifying your product or service offerings can help mitigate risk during times of uncertainty. It can help offset any changes in popularity or demand for one product to another or be justified by season/need. That way, if one product or service is struggling, you have others to fall back on. (But remember – you need to connect the dots and explain your rationale to your stakeholders.)

Invest in your employees by providing opportunities for training and development, creating a positive company culture that fosters collaboration and innovation. To encourage and strengthen your long-term goals, it’s crucial to discuss how you are building a strong team can help you accomplish your big-picture goals and help your company evolve in your industry.

Plan for the Next Crisis

One of the most important steps businesses can take to protect investor trust is to be proactive. Don't wait for investors to come to you with questions or concerns; anticipate their needs and provide regular updates. This can help build confidence and trust in your organization. 

Consider creating a crisis management plan that outlines how your organization will respond to various scenarios. This can help you respond quickly and effectively to any issues that arise. Additionally, consider conducting scenario planning exercises with your leadership team to anticipate potential challenges and develop strategies for addressing them.

Be sure you're actively engaging with your investors for a dynamic partnership. Having a personalized approach with your investors that satisfies their need for updates on your company and builds a trusting relationship can pay off, as it provides reassurance that you're committed to their success.

Contact Investis Digital

Protecting investor trust is critical for any business, especially during times of uncertainty. If you’re looking to create a better investor relations strategy or need help creating one, browse our Investor Relations solutions or contact us here.