The letter to shareholders is a document that explains in a simple and entertaining way what the company does, what its vision of the future is and why it should be invested in.
We are, therefore, facing information that is aimed at shareholders, who do not have to have economic and financial knowledge. For this reason it is so important, since you must make them understand that it was a good idea to invest in that company.
For example, the letter should include the mission, vision or values of the company. On the other hand, it should be easy to read and suitable for people who do not have to understand technical issues, but are interested in making their investment profitable.
Importance of the letter to shareholders
A shareholder is someone who has bought part of a company by acquiring shares in it. They are the owners, to a certain extent, and their role is very important. Large companies, above all, are the ones that must take them into account, since their financing depends on them.
Do you find Economipedia useful?
If you often use our simple definitions, we have good news for you.
Now you can try our courses for free on-line economics, investment and finance at the Economipedia Campus. The section that we have created to help you advance professionally, in an effective and entertaining way.
For this reason, the letter to shareholders is a document that becomes more important every day. Many companies have multitudes of investors who need to be informed. Although they do not intervene directly in management, they are fundamental pillars.
Requirements of a letter to shareholders
Let’s see some of its most relevant requirements:
- First and foremost, it must be simple and enjoyable. While it is true that a financial economics education is of great importance, many stockholders have jobs that are not related to business science and should be written for them as well.
- The numbers are also important, but without going into technical issues suitable only for experts. Therefore, clear and explained graphics are a good option.
- The letter must be written by the team of professionals, but must be read, understood and transmitted by the main leader of the company. For example, in a large company it should be the CEO or executive director.
Tell a story
When we transmit written information we need to know who we are addressing. In addition, we must tell a story, the story of our project, company or business. Not only do you have to sell yourself, but also convince others of your wise choice when investing with us.
Therefore, the document must have a structure. First, an introduction and background that reflects the objectives of the near future. Second, an explanation of the main analyzes of the annual accounts. Third and last, some clear and concise conclusions. Therefore, as in any story, there must be an introduction, a middle and an end.
Sample letter to shareholders
Let’s imagine that we have a company like Economipedia, dedicated to transmitting economics and finance knowledge in a clear and simple way. Let’s assume, as an example, that the company has a number of shareholders that it needs to target. Let’s see how you could do it.
- First, the CEO would start by welcoming newcomers and greeting others. We must not forget to thank them for having placed their trust in the project and making them part of it.
- On the other hand, you can start by describing the services that the company offers and those that it plans to offer in the future. In this way, ideas for improvement are proposed with which it is expected to obtain future profitability.
- Now it’s time to talk about numbers and the rule is few graphs or tables, prioritizing the writing. Most people who are not financially literate will understand what they read better than what they see.
- Lastly, the letter to shareholders can be concluded with a review of what has been contributed and the reasons why Economipedia is a great investment idea.