Sustaining Relationship Focus Reading »

Direct communication is the foundation on which the entrepreneur-investor relationship is based. Just like a marriage, this relationship requires open and direct communication so that the relationship is well defined and does not drift apart once familiarity sneaks into their side.

An Entrepreneur’s Responsibility towards Investors

An entrepreneur’s responsibility towards an investor begins from the moment the seed of an idea germinates in his mind to the moment he receives investment sanctions. Before clinching such commitment from investors, an entrepreneur is required to present a solid business plan that is supported by relevant facts, figures and documents. Commit to the process of informing, educating and updating investors through engaging communication right from the beginning. Remember, it is an investor’s right to know the way entrepreneur’s vision is shaping into clear plan of action that will result in a specific outcome. An investor’s right stems from the fact that the company’s standing and the security of their investment depends on it.  

Often, as a result of lack of communication at this stage between investor and entrepreneur, investors exercise their exit strategy. Honest updates and information is what investors look for. Providing this information may also help entrepreneurs to take advantage of relevant advice and support from the investors and improve their financial state.

An Investor’s Responsibility towards Entrepreneurs

An investor typically has an upper-hand in a relationship with an entrepreneur but this does not free them from having responsibilities towards the latter. An investor has to practice due diligence to assess and validate the business plans and goals of aspiring entrepreneurs. An absence of due diligence from investor is likely to result in a bad investment, increasing the probability of collapse in an investor-entrepreneur relationship.

It is vital to agree on a desired degree of investor involvement to avoid future conflicts and ensure compatibility with their specific business goals and strategies. It is also vital to define a clear exit strategy for both investor and entrepreneur, so that there is no lack of clarity in case of expiry of the business relationship or breach of predetermined relationship terms.

The better way to sustain mutual growth and establish a global brand is to develop a brand that is sure to sell like hot cakes and offer both the entrepreneur and the investor with a perfect opportunity to develop more business opportunities together.

 “To effectively communicate, we must realize that we are all different in the way we perceive the world and use this understanding as a guide to our communication with others.” -- Anthony Robbins