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What are the best practices for communicating with investors using performance reporting?

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Performance reporting is a vital skill for any business owner or manager who wants to communicate effectively with investors. It involves presenting relevant and accurate data on how your business is performing, what goals you have achieved, what challenges you face, and what actions you plan to take. In this article, you will learn some best practices for communicating with investors using performance reporting, such as:

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Debby Morris

President at AccessHope | Board Director | Audit Chair | Author of Unbreakable Determination

1 Choose the right metrics

The first step in creating a performance report is to choose the right metrics that reflect your business objectives, strategy, and value proposition. You should avoid using too many or too vague metrics that might confuse or mislead your investors. Instead, focus on the key performance indicators (KPIs) that show how your business is generating revenue, controlling costs, increasing efficiency, and creating customer satisfaction. You should also explain how you measure and track these metrics, and provide benchmarks and targets for comparison.

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Debby Morris

President at AccessHope | Board Director | Audit Chair | Author of Unbreakable Determination
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Aligning internally on the too 3 to 5 metrics that best measure business performance is key. Once aligned, clean data should be used to accurately measure performance. Only then can you determine what metrics and details are relevant to share with investors. Investors don’t need detail metrics used throughout the organization to measure, monitor l, and run the business - they need visibility into the top 3-5 key metrics along with the strategy to achieve each metric/target.

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2 Be transparent and honest

The second step in creating a performance report is to be transparent and honest about your results, achievements, and challenges. You should not hide or manipulate data to make your performance look better than it is, or avoid addressing the issues that affect your business. Investors appreciate candor and trustworthiness, and they will respect you more if you acknowledge your mistakes, learn from them, and take corrective actions. You should also highlight your successes and celebrate your milestones, but without exaggerating or boasting.

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3 Use clear and simple language

The third step in creating a performance report is to use clear and simple language that your investors can understand and relate to. You should avoid using jargon, acronyms, or technical terms that might confuse or alienate your investors. Instead, use plain and concise words that convey your message effectively and persuasively. You should also use visual aids, such as charts, graphs, tables, or infographics, to illustrate your data and make it easier to digest. You should also provide a summary or an executive overview of your main points and conclusions at the beginning or end of your report.

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Debby Morris

President at AccessHope | Board Director | Audit Chair | Author of Unbreakable Determination
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Every company has acronyms and they can drive an investor or board member crazy. Yes, they can be useful internally to facilitate efficient conversations around business performance, but they are generally effective for investor or external stakeholders. Keeping language simply, straight forward, and easily understandable will ensure dialogue about business performance is effective. Starting with an executive summary, highlighting the overall results is key. Drilling down into some level of detail with investors is appropriate, but only to the extent it adds value to summary level commentary. Sometimes meeting separately with more junior level members of the investor team is appropriate to drill into more detail.

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4 Tailor your report to your audience

The fourth step in creating a performance report is to tailor your report to your audience and their expectations. You should consider who your investors are, what their goals and interests are, what questions they might have, and what level of detail they need. You should also adapt your tone and style to suit your audience and their preferences. For example, some investors might prefer a formal and professional tone, while others might appreciate a more casual and friendly tone. Some investors might want a comprehensive and detailed report, while others might prefer a brief and concise report.

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5 Solicit feedback and follow up

The fifth step in creating a performance report is to solicit feedback and follow up with your investors. You should invite your investors to ask questions, share their opinions, or provide suggestions on your performance report. You should also thank them for their time and attention, and express your appreciation for their support and partnership. You should also follow up with them regularly, and update them on your progress, achievements, and challenges. You should also seek their input and advice on your future plans and strategies.

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6 Keep learning and improving

The sixth and final step in creating a performance report is to keep learning and improving your performance reporting skills. You should review your performance report and evaluate its strengths and weaknesses, and identify areas for improvement. You should also seek feedback from your investors and other stakeholders, and learn from their insights and experiences. You should also research and study best practices and examples of performance reporting from other businesses and industries, and apply them to your own context. You should also keep abreast of the latest trends and developments in performance reporting, and incorporate them into your report.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Debby Morris

President at AccessHope | Board Director | Audit Chair | Author of Unbreakable Determination
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Quality over quantity is key in creating a valuable performance report - one that is digestible effectively by investors. Presentation is at least 50% of the value. Take time to present the key metrics clearly and concisely and in short and sweet format. Avoid lengthy PowerPoint decks with small font, long embedded spreadsheets, and infinite amounts of data. If using colors to identify status, keep it simple with green, red and yellow; do not include multiple shades of each color. Being crisp and clear around metrics that drive performance will be appreciated.

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What are the best practices for communicating with investors using performance reporting?

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1 Choose the right metrics

2 Be transparent and honest

3 Use clear and simple language

4 Tailor your report to your audience

5 Solicit feedback and follow up

6 Keep learning and improving

7 Here’s what else to consider

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