Investor relations is the activity through which an organization consciously builds relationships with current and potential investors, financial analysts and the media to ensure it has not only their confidence, but access to all the funds it requires at the most favourable rate.

Many private sector organizations ignore investor relations because they are privately held. However, there is a powerful business case for winning the hearts and minds of external stakeholders.

Fundamentally, the responsibility of investor relations is not only to create an awareness and understanding of the organization, it is also to help gain access to capital and achieve liquidity in, and fair valuation for its shares.

Investor relations is a discussion and is as much about organizations listening to the views and feedback from investors, the investment community and the financial media, as it is about organizations explaining their business to the same groups.

The aim of embarking on an ongoing investor relations program is to enable the investment community to have greater awareness of the organization's investment proposition, structure and operations so that leaders, creditors, shareholders, potential investors and the financial media can each take an informed view.

For an organization to communicate effectively with the financial media, it is imperative that its representatives understand the dynamics of the financial journalist's agenda. The rise in demand for financial news, not to mention all types of news, combined with cutbacks in the media has resulted in a significant increase in workload for journalists. The speed of the internet and social media means journalists must constantly update news stories throughout the day - and night - to stay on top of a story.

It is interesting to note that as other relationships improve, outside investors and new partners will show an interest in the organization and will bring financing proposals and projects to them for consideration.