➡️ Introduction

You’ve likely heard the same questions time and time again.

What should we expect for revenues this year? Do you have any earnings projections for the next quarter? What can you deliver out of your backlog in the next six months?

As tempting as it may be to provide guidance to the market, I believe this is a risky proposition for Canadian microcaps. There’s likely limited upside in the short-term to satisfy the needs of investors or traders, but it presents a significant credibility hit if you’re not able to achieve your guidance.

One of the things I constantly remind clients is the pursuit of “under promising and overdelivering”.

I believe that by providing guidance, you create asymmetric downside risk and hinder your ability to build trust with the market and overdeliver on expectations. 

In addition, the ability to forecast and achieve guidance for microcap companies is challenging versus larger and more established largecaps. Even then, many largcaps don’t get it right.

As a result, my recommendation for most clients is to not provide guidance or stop if you already are. 

Here’s why providing guidance is not a good idea…