Do You Need to Share Your Financial Statements With Investors?

When you’re deciding whether or not to share your financial statements with potential investors, there are several things you should take into consideration. While it’s generally common practice to share these, there are times when it may be more appropriate not to. Here are a few important questions you should ask yourself before sharing your financial statements with an investor:

Do I Need to Share My Financial Statements?

If you’re wondering whether to share your financial statements at all, keep in mind that not all startups need to share this information with investors. Furthermore, many companies don’t want to make them public at all. When deciding whether or not you should share your company’s financial statements with your investors, there are a few factors that you should consider: how far along your company is, what type of investors you have, and what they expect from you and your company as well as how much funding you have raised thus far. If you are in the very beginning stages of starting your business and want to prove that you won’t be a risk to your investors, it might be best to share your financial information. This will show them that you haven’t accumulated too much debt and that you are well on your way to being successful. Keep in mind that if you are too private about your finances, some investors may not want to work with you. This will be detrimental to your business and you will be missing out on opportunities to grow. 

Will I Lose Investor Relationships If I Don’t Share My Numbers?

In deciding to share your numbers, consider how your decision will impact your relationships with your investors. Making your company’s financials available to investors is a smart business move, but not all startups feel compelled to share their books unless required by corporate law. However, if you’re considering keeping your finances to yourself, you should know that it could potentially cost you some valuable relationships as most investors value complete transparency and honesty.

Should I Include Monthly Or Quarterly Numbers?

If you decide to share your numbers, consider whether you’ll send monthly or quarterly reports. Quarterly reports are more frequent than monthly reports, but it depends on what your company does for business. If you’re an Internet-based business, you probably don’t need to release financials as often as companies that sell physical products that take longer to produce. You may find that quarterly reporting is fine for your particular operation, but if you’re nervous about monthly projections or if your customers want more regular updates, then monthly financials may be necessary.

How Should I Document My Finances?

When it comes to securing funding, your business plan and financial statements are critical. Financial statements detail all of your assets and liabilities in a company: revenue and expenses go on one side of an income statement; assets and liabilities go on another. A balance sheet details these two groups of items at a specific point in time. Make sure you always keep track of who you are sharing your financial information with as well. Keep a note of every investor you talk to and share your financial statements with. This will help keep your business secure and help you track down problems if any of your information gets leaked. 

Who Should I Share My Information With?

You will want to know who you should share your information with. The investors you talk to will likely be part of a team. Understand how their team works and if you will need to send your financial statement with every member, or just the person in charge. You don’t want to give your financial information out to anyone who doesn’t necessarily need to know. Keep it as private as possible. You might also want to do your own quick background check before deciding to work with an investor. You want to make sure they are trustworthy and are qualified and professional enough to work with. 

Should You Get Advice From a Financial Advisor?

When you are starting a new business, it’s best to work closely with a financial advisor. You should work with them while gathering your financial information to share with investors. They will help you accumulate that information and organize it in a way that’s easy for investors to understand. They can also give you advice about sharing financial information. They can help you know if it’s appropriate to share certain information with certain investors. 

Will They Be a Long-Term Partner?

If you are reaching out to investors that might not be willing to work with you long-term, it might not be worth it to share your financial information. However, if you are seeking out established investors with good track records and you know they will be valuable for your business long-term, do everything you can to build a good relationship with them. In those cases, it will be best to share your financial statements with them. 

If you’re deciding whether or not to share your financial statements with investors, it’s helpful to consider each factor involved. Use this information as you decide how best to move forward with your investors. Make sure you don’t give your information to just anyone and take time to make decisions about which investors to work with and if it’s worth it to share your information. It’s a big decision that can end up determining the success of your small startup. 

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