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Jul 04, 2017

Six top tips to make the most of a small-cap budget

Two IR Magazine Award winners talk about making the most of lean financial resources

Small-cap companies have their share of challenges: lack of recognition, lack of liquidity, little or no sell-side coverage and – of course – limited budgets and resources. Given this operating environment, small-cap company IROs need to change their thinking on how to maximize their budget and strategically allocate resources for the best results. 

Venus Zhao, head of IR, corporate finance and public relations at Far East Consortium International in Hong Kong, and Julie Tracy, chief communications officer at Wright Medical Group in Memphis, share their thoughts on the issue.

1. Bear in mind the strategy of the company and the KPI of the department
‘Every company is different: in its development phase, market capitalization, liquidity and shareholder base,’ says Zhao. ‘IR departments should work toward the strategy of the company and use resources wisely. For small-cap companies, the prime tasks for the IR team may be to enhance liquidity, diversify the shareholder base and increase market capitalization. 

‘For larger caps, the prime tasks may be to communicate fully to the firm’s already very diversified shareholder base, manage the expectation of its shareholders, and win their support in proxy voting. Thus, it is important to talk with the management of the company before you get on board with the strategy and direction of the company and the KPI of the team.’

2. Prioritize the IR tasks
‘There may be many IR tasks that need to be completed, but first you need to prioritize them,’ Zhao continues. ‘First tackle the most urgent and important ones, plan for the non-urgent but important ones more thoroughly, and put aside the non-urgent and non-important ones until a suitable time.’

3. Choose your vendors wisely – and negotiate
‘Third-party vendors can be very good partners on IR projects, especially when you have a small team,’ says Zhao. ‘Think about the kind of tasks you want to outsource and choose vendors wisely based on the suitability and budget.’

‘Negotiate everything with your IR service providers,’ adds Tracy. ‘Consider bundling services and negotiate multi-year discounts in exchange for a longer-term commitment.’

4. Periodically review KPIs and the budget
‘It is important to review both your KPIs and your IR budget from time to time and report to company management or the board about what has been achieved from an IR perspective,’ notes Zhao. ‘If you can show achievement [within] a relatively small budget, it will be easier to win the support from management to approve the budget for the next term.’

5. Use technology 
‘Take advantage of the latest in technology – from social media to webinars and, especially, videoconferencing – to allow your management team to engage with investors remotely and save on travel expenses,’ advises Tracy. ‘Try mini ‘pulse surveys’ instead of full-blown investor perception studies – or better yet, do your own investor surveys using SurveyMonkey or any of the other online survey tools at little or no cost.’

6. Leverage the right platforms
‘Leverage investment bank sell-side platforms,’ says Tracy. ‘Ask the corporate access team at sell-side firms that cover your company for investor targeting analysis reports for your company: I’ve found they will gladly provide these for free. They will also help you tap into their distribution teams, which are managing relationships with key fund-level analysts and portfolio managers at every institutional investor across the globe.’

IR Magazine Conference - Small Cap 2017

The IR Magazine Conference – Small Cap 2017 is the first IR best practice event in New York exclusively for CEOs, CFOs, IROs and advisers from small-cap companies, offering you the perfect opportunity to:

Explore, discuss and debate topical investor relations issues 
• Discover new technologies, services and innovations to transform your IR strategy
Network extensively with IR professionals from a wide range of industries.

For more information about the event – including agenda details, sponsorship and ticket information – please visit