You saw your company grow immensely in 2022. Now you are looking to expand your company growth by introducing greater corporate ownership. The problem is, where do you begin to effectively manage the countless records, spreadsheets, and other information that will need to be regularly updated as you continue to issue new shares?
It may be tempting to wait to begin tracking new equity. However, the reality is that the earlier you have a solid system in place to track your company’s equity data, the better. It is essential that your stakeholders remain on the same page. They’ll know what to expect when it comes to delving into equity. They also can review their current holdings at any time.
No matter where you are at in investing in your business, there are several ways you can ensure you are effectively and responsibly managing your business equity for continuous future growth. Yes!
1. Identify your business growth objectives.
Before you can effectively manage your business equity data, you need to have well-defined business growth objectives. Much like a marketing professional needs a clear road map to facilitate an effective marketing strategy, as an entrepreneur, you need to plan for your business’s growth.
To get started, envision where you want your business to be in the next one to two years. Brainstorm ways for your revenue to grow. Break down what growth objectives you want to meet for each quarter, allowing you to review what goals were met or missed at each point and revise your growth plan, as necessary.
Not only will a solid set of objectives keep your business on track, but it will also ensure that stakeholders and investors are on the same page and reduce future financial risks and losses by ensuring you have everything you need in place.
2. Create an effective growth strategy.
Once you have a strong grasp of what you want to achieve when it comes to your business’s growth, perform a comprehensive SWOT analysis. This will provide you with an effective growth strategy. From there, you will be able to clearly see the risks and opportunities for your company. This is true whether it relates to the current market and economy, available internal resources, competitors, or your target consumers.
To begin shaping your business growth strategy, business leaders must consider what internal resources can facilitate organic company growth for the greatest efficiency and avoidance of future debts. This includes recognizing what internal resources and business processes currently in existence can be purposefully used to stimulate increased revenue growth.
From there, identify what you need in terms of external resources and funding. These will help your business grow long term. This will assist you in working with your current and future investors. They will understand your business’s needs. They’ll see how your company is working to improve operations and facilitate future growth through a clear value creation strategy.
3. Use cap table management software.
When it comes to effectively managing your business equity, streamlining the workflow process is essential to remain organized and consistent.
A hand-created spreadsheet may seem like a good option for tracking your equity. However, there is always the chance that you may miss something important. An inaccurate calculation can have a major impact on determining new partnership shares. It might even prevent your company from meeting regulatory compliance. Therefore, a proven cap table management software, like Astrella, is a simple, easy-to-use blockchain technology software for managing your data within compliance standards.
A recent Astrella survey found that, “Companies with larger valuations seek stakeholder influence more often in decision-making processes, including what cap table management vendor to use.” Similar benefits are also seen for smaller businesses, as the right software helps track preferred financial data, improves understanding of available options and processes, identifies your business’s needs, and allows entrepreneurs to openly visualize and adopt alternative outcomes.
4. Hire the right financial professionals.
Having the right financial professionals in place to manage your business’s shared ownership data is vital. It’s just as important as having the right software in place to manage your equity information.
If you are a larger company, hiring both a bookkeeper and accountant is best for keeping all your ducks in a row. This will ensure that your business’s daily functions and financial reporting is accurately and consistently tracked.
It also guarantees that your business stays in compliance with state and federal tax regulations. Having multiple financial experts available to your company is the smart move. It ensures that you manage your assets properly and make the right financial decisions.
What about smaller businesses that are just beginning to see new growth? It may be more cost effective and viable to outsource a financial firm to manage your company’s assets.
No matter which routes you take, proceed carefully. You want to be sure that the individual or firm has a strong understanding of your company’s growth objectives and goals. Make sure they have experience with other companies, and that they align with your company’s values, ethics, priorities, and mission.
5. Invest in your company employees.
For the best results, it is important to be transparent and fair towards all your employees, whether they work in-person or remotely. Consequently, this means providing your employees with equity options that will streamline performances. It also means keeping them educated on how their equity investment dollars are working for them.
Having a healthy equity compensation plan in place improves recruiting and retention efforts. It also positively influencing employee health and productivity. Following workplace changes after the pandemic, a June 2021 survey found that employees need benefits to be expanded to meet basic needs, while having easy access to benefit information and an improved workplace culture. While the survey focused on health equity, you could say the same for providing equity shares to employees. This provides a safeguard for their career growth and retirement with the company.
Your business partnerships will (hopefully) be with your company for life. Consequently, that means you need to be careful and deliberate about tracking your business equity and ensuring compliance. Having the right equity management system in place for your business is critical. It will mean the difference between staggered growth in 2023 and financial success for years to come.
