Investors are an important fact of business life. They can make or break you, so it's best to manage them in a way that keeps them happy. But your investors' happiness does not mean totally sacrificing your own. It's all about balance and properly managing the investor-owner relationship.

Three important reasons for properly managing your investor relationships are:

1. Investors are an important revenue source.
2. Investors can boost your opportunities for growth and sales. They usually come with good contacts.
3. It will help maintain good working relations between you and them.

Action Steps
The best contacts and resources to help you get it done

Schmooze

Building a healthy, positive relationship with your investors is a good first step. You'll get to know them better, and in return they'll learn to trust your judgment and have confidence in you and your company. Having a good relationship also can lead to opportunities for growth and sales through their personal networks.

I recommend: Brush up on business etiquette and polish personal skills. Business etiquette services such as Personal Best and Exertus Partners can get you on the right track.

Set up a regular communications channel

Good communication is an essential piece of the investor-business owner relationship and goes both ways. Your investors will respect and value you more if you keep them informed of good and bad news. Send quarterly updates and notes about new hires, contracts, partnerships and media coverage. Allow investors access to you, too.

I recommend: Set up online appointment scheduling with software such as Microsoft Appointment Manager so investors can access your calendar and check in with you at convenient times. Microsoft Office Publisher can assist with newsletters.

Manage expectations

As a small business owner, don't make promises that you can't keep. Be conservative about projections because they can and do change. Be timely with bad news and don't sugarcoat it. Investors aren't fond of bad surprises.

I recommend: Create a private intranet to highlight news and collaborate with shareholders via Microsoft SharePoint or Socialtext. Companies such as Haynes Capital handle investor inquiries for business owners.

Friends and family

Business time means profits come first, family issues second. This motto can be tricky when dealing with family members as investors. A business can fall apart if too much time is spent on maintaining family accord. Make sure you're clear about what a family member or friend's role is as an investor, and learn to be a positive communicator.

I recommend: If problems arise, call in a consultant to smooth things out. Powers & Co. specializes in family investor issues.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Don't compromise the chain of command. Investors should communicate with the appropriate point of contact, not company employees.
• •  Don't involve investors in operational details; discuss the big picture instead.