Being transparent with your business’s financial dealings
can be difficult and stressful. However, it is extremely important and helpful
to your business, its operations, and its overall reputation, especially if you
are just getting started. Transparency doesn’t, of course, mean that you are
willing to share all of your financial details with anyone and everyone, but it
does and should mean that you are willing to share it with others in the
company, as well as with potential investors.
Being open and honest about your current corporate financial status,
as well as your future plans related to that status can prove helpful with all
of the following:
l Attracting
investors
l Hiring
good, future-minded employees
l Bringing
in clients
When you share your financial information with investors,
you are showing them that you have nothing to hide, that you are not trying to
scam or mislead them in any way. You are allowing them to come into your
business with full knowledge of what they are getting into, and even if there
are some faults, many investors will admire your honesty enough to give you a
shot.
Likewise, employees want to know if they’re coming into a
failing company or a bustling, busy one, and they deserve to know that. Sharing
general information before hiring and more information after hiring also shows
your employees that you trust them, and, in the same token, shows you which
employees you can trust.
Finally, clients will be more willing to work or do business
with honest companies who have nothing to hide. Yes, showing your financial
situation, flaws and all, can be difficult, but it’s beneficial too, which
makes it worthwhile.
What to Share
While sharing, in general, is good, too much sharing is
bad.You do not have to tell everybody everything; remember that. Choose to
share details that give away enough information but not too much. Things that
are worthwhile and okay to share include:
l How
many users/clients you have
l Activity
level of users/clients
l Annual
revenue
l Current
and future operations plans
l Funding
l Losses
That might seem like a lot of information to share, but
remember, NOT sharing it, especially if you’re a startup, can lead to rumors,
untruths, and fearfulness about dealing with your business, which is the last
thing you want.
What NOT to Share
Remember, when it comes to sharing, there definitely is a
such thing as “too much information.”
The basic rule is not to share anything extremely negative
and/or unfixable at the current time. If you share something negative, make
sure you also share a plan for how you intend to fix it. If you haven’t yet
worked out a solution for a particular problem, it’s probably best not to share
that issue until you do.
The Power of Feedback
One final positive of sharing information is that you will
invite constructive criticism and feedback from others who have insight into
what you may need to improve on. Sure, some of that criticism may be hard to
take, but, just like financial transparency in general, it will benefit you and
your business in the long run.
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