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What are Tax Free Investments

INVESTING VERSUS SPECULATING

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No strategic investor relations plan—nor any marketing plan—can be effective without a clear view of objectives. After all, if you don’t know where you’re going, how do you know how to get there? If you don’t have a clearly defined sense of why you’re putting yourself through all these machinations, then why are you doing it?

Objectives, like visions, must be concrete and realistic if they are to have any value at all. Not wishes, but goals to be achieved to make a vision a reality. Well-formulated objectives make a vision a working tool for a firm’s growth and success. It’s crucial, then, that the objectives be precisely defined, in terms of the realistic ability of a practice to meet those objectives. They are, in fact, business decisions.

In an investor relations program, well-formulated objectives are a guide for choosing your target audiences, defining your company in terms of your value to the target group of investors, and defining and managing the investor relations and marketing tools.

The objectives for an investor relations program begin, naturally, with the capital needs of the company. But there are other very specific factors that differ from company to company, from industry to industry. In defining investor relations objectives, three specific elements are paramount.

• Your company. Where are you now and where do you want to be? What are your plans for growth and expansion? What is your time frame? What are the opportunities for your company’s products and services? Is market expansion viable and realistic? Can you manage growth? In what kind of increments do you plan your growth? What are your plans for research and development to help you compete in a changing economic environment? What are your contingency plans if there is a downturn in the economy? How do you plan to market your products or services? And ultimately, how much money do you need for your future, and how do you plan to use it?

• The economic environment. The economy itself is an external factor over which you have no control. It should, however, be a significant element in determining your objectives. Because business invariably runs in cycles, and the economic environment changes, your objectives are a function of the ability to understand and relate to these changes. A case in point is the rapid growth of the computer industry as new technology became an integral part of doing business, and which then dropped off as a saturation point was reached, along with a lull in new technology. It began to change again as we entered a new era of communication that has been tantamount to an industrial revolution that affected even low tech companies.

• The capital markets. Obviously, the ability to raise capital at any given time is a function of the capital markets. While there are many sources of capital, the flexibility of those sources changes dramatically in response to innumerable stimuli. There are trends and cycles, and while there are always exceptions, as a general rule it’s not a good idea to try to raise capital for a company with a speculative idea in a tight market.

Codifying these objectives helps to develop an investor relations program that’s relevant to your needs as a company, and relevant to your company in pursuing capital to meet those needs.