That’s what your investors want you to do from the day they wire money into your account until you hit them with, “Please confirm your wire instructions.” to send their share of what you’ve sold your company for.
Withholding bad news from investors is a basic symptom of companies about to fail.
Asking for help is a basic habit of successful entrepreneurs.
Good news is optional. Bad news is mandatory. For investors, responding to calls for help is the ideal way they contribute to a good outcome. Not because they know more than you do about your business but because they know more people than you do. You cannot begin to fathom who they know that might be able to help you out of a tight spot.
One of my most treasured mentors put it this way, “The only unforgivable error an entrepreneur can make with me is to withhold bad information. Not because I’m a genius but because I demand the right to apply my resources to the problem.” His resources are 50 years of people, projects, history, horror stories and successes that may be relevant to the problem that is sitting in your lap for the first time. Like him, your investors have probably seen it before, whether it’s a lawsuit, contract dispute, crazy employee, regulatory, tax or legal wildfire.
I tell folks I’m really good at putting out forest fires, but I prefer brush fires. If people tell me where they smell smoke, we can usually find somebody to help stamp out problems before they become issues and, certainly, before they get a chance to crush my investment and your company.
Anyone who’s been a teenager gets it. No one wants to feel stupid, be embarrassed or endure “the look” when things go wrong. Successful investors understand that. Most of us will tell you we’ve made more mistakes than we care to remember on the way to becoming an investor. So, we get it.
Are your investors going to pull their money out? Won’t happen. Are they going to sue you? Probably not - you likely haven’t made enough money to make it worth the effort. Are they going to be disappointed? Momentarily...if you get to them before they get pissed off that you didn’t do the best you could by asking for help.
If you think you’re bothering them, think again. Most investors are REALLY creative at connecting their portfolio teams to people: other portfolio CEOs, academics, other investors, service providers, executive coaches and experts they don’t even know yet, to help you out of a jam.
I’m betting there’s something smoking on your company’s landscape right now that can be put out with a phone call or two. Don’t trust this advice, though. Test it. Call somebody for their perspective.
Tony Wilkins, CFA is an early stage investor and venture coach focused on improving outcomes for founders and investors by shortening learning curves and helping avoid avoidable mistakes by delivering his perspectives from 40 years of a broad variety of operating, financing and investing experience. Tony@StandingOaksVC.com.
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