Primary stakeholders are individuals or entities that benefit from or are directly impacted by the operations and activities of a business. Both public and private companies -- and small and large businesses -- have stakeholders. A small-business owner must recognize the sometimes competing or conflicting needs of each of his stakeholders and operate his business in a manner that will deliver the benefits expected by each one -- and minimize possible negative impacts on them.

Shareholders

All public and many private companies have shareholders whose primary objective is to receive as great a rate of return on their investment in the company as possible. They can be negatively impacted by the company if it experiences severe financial difficulty and the value of the shares decline or if the company cannot afford to pay the dividends that shareholders have come to expect.

Managers and Employees

The benefits managers and employees receive include monetary compensation, job satisfaction, the opportunity to learn and acquire new skills, job advancement and promotions. They may also receive benefits such as health insurance and retirement plans. Meeting the needs of employees can result in the small-business owner not having sufficient cash to pay himself the compensation he desires. In public companies, stockholders sometimes complain that executive compensation is too high, reducing the cash available for dividends or investments in expanding the company’s operations.

Customers

A company’s customers seek to purchase the highest-quality products and services for the lowest price possible. The business owner wants to maintain pricing that leads to the highest possible profit margin without losing customers to competitors who charge less. The purpose of business enterprises is to provide products and services that solve customers’ problems or satisfy their needs. Customers can be negatively impacted by companies that market substandard or dangerous products, offer poor customer service and overcharge.

Suppliers

Companies benefit their suppliers through purchasing goods and services from them. In some instances a supplier may depend on the company for the majority of its business, so that entity can be severely impacted if the company decides to purchase from another supplier. Suppliers can be negatively impacted by doing business with companies that demand price concessions or other onerous terms, such as forcing them to wait an unreasonably long time to be paid.

Creditors

Many companies use some form of debt in their capital structure, including lines of credit and loans secured by equipment. The company benefits the creditor by giving it a means to earn a return on the financing it provides. Companies that go through financial difficulties can negatively impact creditors through delaying interest or principal payments or in worst cases defaulting on the loan.

The Community

Many corporations view society as a whole -- even those people who will never do business with the company -- as primary stakeholders, because the actions of the enterprise can directly benefit or harm members of the community. These businesses actively seek to benefit society through such actions as good environmental stewardship, charitable contributions and encouraging employees to get involved in activities that have a positive effect on individuals or groups in the community. As part of the company’s planning process, management seeks to find ways for the business to be a more positive contributor to the community, such as developing programs to improve sustainability -- using less energy and creating less waste or pollution.