Most corporate executives would not list investor relations among their preferred responsibilities. Management teams want to focus their time on running the business and letting the results speak for themselves. Market prices reflect all available information, so why bother to do more IR than the minimum? In practice, companies find their stock prices to reflect a lot of noise. This is particularly acute among smaller and illiquid companies where there is a lack of meaningful buyers and sellers. Many small companies come to the conclusion that the market has already made up its mind. Yet earnest small companies who think the marketplace is missing something meaningful can use proactive investor relations to make a difference. Below are five things every executive should know about how a proactive investor relations strategy brings about change.

Marketing – There are thousands of publically listed companies. No one professional investor has the time to pay attention to even a small fraction of this market and will likely never hear about the clear majority of public issuers. If a brokerage firm can do a company’s financing or make trading commissions on a stock they will do their best to let other investors know about the company, otherwise there is no rational reason to promote any issuer. A world of tens of thousands of small cap investors typically does not interact with a world of thousands of small public companies. The two worlds can be bridged through proactive investor relations and the various marketing tools available to said companies.

Following – Many small companies suffer from a lack of attention. Proactive investor relations can put more eyeballs on a company. An effective IR campaign introduces an issuer to many new investors, distributes corporate materials to a much larger audience, sets up regular calls and meetings with new investors, and keeps investors up-to-date across relevant activities. This is a continuous process which builds out a company’s following to unlock value and improve liquidity. This is vital to grow momentum and for an IR program to gain traction within the investment community.

Relationships – Dialogue with investors is critical for a small company and management is paramount in the stewardship of this. Every professional investor buying stock in a small name is likely betting on the jockey as well as the horse! A proactive investor relations strategy creates valuable interaction and face time with interested investors. Investor prospects, like business prospects, take time to educate and cultivate before they consider buying into the company’s opportunity. Its about keeping the end goal in sight and knowing it’s a long-term relationship building process.

Diversity – The right IR approach covers the relevant industry participants and geographies to a public company. This means targeting interested institutional investors, retail brokers, select private investors, institutional research analysts and their sales teams, investment bankers, and other relevant parties. While some participants are more important than others at certain times, balance is necessary and each group presents its own opportunity to raise a company’s profile. Whether Canada, the U.S., or Europe there should be no geographical IR limit in today’s globalized capital markets. The biggest shareholder could be across the ocean and one that wasn’t on the company’s radar.

Professional – Above all, the right IR strategy focuses on professional investors. Sophisticated investors are more adept at understanding a small company’s long term prospects. They’re better positioned to tolerate volatility and have longer time horizons. They’ve been to this dance before and are typically understanding shareholders when properly informed. They ask the right questions and do thorough diligence. They know what they are getting into when investing in a small company and often become sources of future growth capital.

While focusing on running a business, corporate executives can unlock additional value for both current and future shareholders by making proactive investor relations a higher priority of preferred responsibilities.