After you successfully raise your funding through crowdfund investing and start your company, you have a timeline that you’ve set for your company with goals that you want to stick to. But along the way, many things come up that you didn’t plan on — that’s completely normal. Some of these things may be good, and some of them take a lot more time and money than you expect.
Clearly, you want to follow through on your goals and stick to your timeline, but sometimes that’s just not possible. Evaluate your progress on a regular basis, and be honest with yourself about it. If you can see that you aren’t going to meet a certain milestone or goal, you need to extend your timeline.
Figure out what the main choke points are and how long it’s going to take you to get them worked out. Some of your investors will undoubtedly be frustrated. How you deal with the situation will dictate how they react.
Set up a new timeline and be honest about it. If you thought a certain task would take a week, but you know you need a full month, be honest about needing a month. Don’t underestimate your needs in the revised timeline; be realistic in your assessment. You want to tell your investors only once that a certain milestone or goal needs to be moved out; you don’t want to make that same announcement multiple times.
Most investors know that starting a business always takes longer than expected. What they want from you is honesty. So be honest.
Revisit your planned milestones and goals
When you decide to extend your timeline, you really need to dig into your planned milestones and goals. Some of your goals may have been too lofty. Now that you’ve been working on your business for a while, you have a better handle on what’s possible. Take this opportunity to revisit your goals and decide which things you can drop and which are essential.
If you determine that a certain goal is no longer essential to the completion of your timeline, put it on the back burner. (Certain things that seem essential when you’re in the planning stage become less so when you’re actually up and running.)
Explain delays
As in any situation where you’re making a pivot (a fairly significant change to your business plan), you must be honest and consistent in your investor communication. The sooner you can anticipate and communicate project delays to your investors, the better they’ll handle the changes.
Think of it this way: You need to sell your investors on the idea of a delay. When selling anything to anyone, you want to talk about the benefits to them — not the benefits to you.
If you have multiple issues delaying your progress, you need to explain each one in a detailed but efficient manner. Consider creating a spreadsheet, and include the following information for each delay:
The problem
Why it occurred
What you’re doing about it (how you’re handling it)
Why waiting for this problem to be fixed is important enough to delay the opening of your business or to extend your project timeline
Why delaying your launch or your project will benefit the investor as a shareholder
After you create this spreadsheet, you can use it to keep your investors up to date on the progress of each issue. Add a column called “Progress Notes” or something similar. Let investors know that you’ll be updating this list regularly so they can check on your progress with each item.
As an added bonus, you may find out that someone in your crowd has expertise that can help you come to a quicker resolution on one or more items. If they see that you’ve got a specific issue that relates to their field, they’ll be more likely to offer help.
Ask your crowd to stick around
Say that your first year of business is coming to a close, and you’re facing delays that will prevent you from hitting the goals you laid out for your first 12 months of operation.
You know that, per the JOBS Act, your initial equity investors have to hold onto their stock for a minimum of 12 months. (If you chose to run a debt-based crowdfund investment campaign, chances are, your debt investors are obliged to stick with you for 12 months as well.)
As the 12-month mark approaches, reach out to the crowd proactively, and ask them to stick around. You certainly don’t want the distraction of major upheaval among your investors; the mass exodus of investors won’t help you reach your goals any faster!
Explain why their continued support is so vital, and request that they stick with you for a minimum of another three months or six months or whatever time frame you need to prove that you can meet your initial goals.
Give them solid reasons for why they should stick around. Create a list of bullet points that reflect your successes to date. Don’t be humble! Show the value you’ve created for them by being detailed about your progress. If you’ve been collecting e-mail addresses of potential customers, for example, show your database to your investors. If you’ve been in talks with potential partners, disclose that fact.
Your investors will only want to walk away if they believe that you’re never going to follow through on your plan and you’ll never create a return on their investment. If you’ve extended your timeline six months, asking them to hold their exit decision until that time shouldn’t intimidate them.
Tell them that you’re completely confident they’ll have a change of heart when they see your progress (and, of course, make sure that your new timeline is honest).