Investors look for confidence. They want to see a business plan that has a future, good ideas and products and undoubtedly a management team who can weather storms and maximise opportunities.
One company who has seemingly had constant problems since floating in May is Facebook; their shares were initially priced at $38 but just a few months later they are trading at less than $19. Last week, founder, Mark Zuckerberg admitted to employees that it had been painful to see the company’s shares tumble so far (his personal fortune has fallen to $10bn from a high of $20bn). While we’ll never know if they were just trying to cash in some equity, or were worried about the future of the business, shares were further hit last week when employees and backers, at the first opportunity to do, rushed to dump their stock. This lack of confidence, from those closest to the business, worried those looking at the social network as a possible investment and will likely further discourage them from buying the shares.
On the other hand, one company seems to be going from strength to strength financially as their soaring market cap made them the world’s most valuable business this month. While losing Steve Jobs, and occasional market disappointment, has knocked confidence in the shares in the past, it seems to only now take the slightest rumour of a new phone’s release to give Apple’s stock a bump up in value. Behind this high share price is confidence, both in the innovative, desirable products the business creates, but also in the team who run the company and the direction they are driving towards.
So how can other companies build confidence and positivity with their investors? Obviously it helps to have a strong business model with a huge range of great products, but when it comes to investors the focus is often going to be on those individuals running the company. If you can show you are passionate and confident about your organisation, this will rub off on an audience, furthermore, if you’ve thought about the difficult questions you could be asked on your market, or recent performance, and can supply considered answers to them – you will go a lot further to convincing investors that you are worth a commitment.
At a time when investment is fairly scarce, businesses have to do everything in their power to make a compelling case to the market – if you can’t do that then it’s likely that you will be overlooked in favour of someone who can.
Written by Will Edwards – www.bluewoodtraining.co.uk – August 2012