Explaining the simple trick to good corporate communications - Martin Towers

In the public markets there are strict rules around shareholder communication particularly in the event of significant news, both good and bad, that could materially impact the share price either way. Not only around what to say but also when to say it.

This situation gives rise to the financial PR firm that no public company of any size can afford to do without.

But move away from the public markets and the situation changes. Private companies may feel no need for a financial PR adviser and this likely includes private equity. The opposite situation can arise, however, where a private company seeking to keep a low profile pays a financial PR firm specifically to keep them out of the news.

The entrepreneurial early stage start up business will welcome the oxygen breathed into the fledgling business arising from some positive PR about the product or service. There is no such thing as bad publicity. Where these businesses can fall down is in communicating, or not, with their investor base. It is vital that is done for there may be more funding rounds to come. Some such entrepreneurs are overzealous and bombard you with news to the point you think more time should be spent in running the business. Other entrepreneurs can be more bashful and this stems from ‘this is my baby’ and a reluctance to communicate or at least appreciate its importance.

The answer is generally keep a happy medium. Banging on about every event can set the precedent in reporting good news with frequency. How do you then deal with bad news for if there is a lull, investors may smell a rat if its all gone quiet over there.

Communication is all about managing expectations. The trick is under promise and over deliver.

Keeping investors and other stakeholders informed such that the future is not painted too gloomily or too rosily. This is not always easy at present with the uncertainty around future performance given the geopolitical and economic headwinds.

Of course the whole internal communication piece is at least as important as the external. In very small businesses everybody knows what is going on without the need for formal communication, but beyond that, in this day and age, getting the internal message across is pivotal to success.

There is no substitute for personal appearance by the boss. This applies most necessarily in tough and difficult times when a re-assuring message is essential to stop the rumour machine going into overdrive and for staff to believe there is a leader who will get us through this.

Martin Towers is the former finance director of Kelda Group, which was the parent company of Yorkshire Water, and former CEO of Spice PLC. He is now an early-stage business investor.