A business’s success relies heavily on the people at its helm. For small businesses, that’s generally the owner and any business partners you have. As your company grows, however, you’ll likely add a slew of people who have a financial interest in your business. These individuals are known as stakeholders. Keeping these individuals happy is an important part of moving your business forward over the years. Fortunately, there are best practices already in place that businesses of all sizes can follow to ensure the happiness of everyone who invests in your business.

The Importance of Stakeholders

Look around you. Chances are you’re surrounded by stakeholders no matter how big your business. The employees you pay a salary, the freelancers who perform work for you and even the vendors who refill your water cooler and provide your office space lease can all be classified as stakeholders in your company. They all depend on the success of your business, at least partly, for their own income.

You also rely on those stakeholders. Whether they support you financially or operationally, they form the foundation of your business. They also act as brand ambassadors by telling others about the great work you’re doing, whether on social media or in conversation with others. Just as a strong personal support system keeps you moving forward in your career, the same support system can propel your business to the next level. However, that support goes both ways, and it’s important that you also work to nurture your stakeholder relationships.

Finding Good Stakeholders

If you’re just starting out, you may still be wondering how to find top-notch stakeholders and convince them to participate. You’ll likely already have at least one person you count on for advice, but these people may not be benefiting from your business in any way. If you’re a one-person operation, your stakeholders are merely the people and organizations that support you financially, such as the lender who offers you a small business loan that you’re working to repay. If you hire a freelancer to design your logo, this person will have a stake in your business’s success, both while waiting for you to pay for work performed and while moving forward, as the professional uses the logo as a sample in his portfolio.

As you begin seeking investors and hiring employees, you actually have direct control over how invested your stakeholders will be in your business’s success. Look for individuals who are excited about the work you’re doing and who will be a good fit for your existing culture. Clearly communicate the mission of your company and where you hope to be both long and short term and you’ll find you naturally attract those who feel passionately about what you’re doing.

Stakeholder vs. Shareholder

Two words you may see used interchangeably are “stakeholder” and “shareholder.” While the term “stakeholder” can be applied to anyone who is a shareholder in an organization, the reverse isn’t true. A person can have a stake in your business but not hold any actual shares. The point at which a person becomes a shareholder is when that person purchases actual shares in your organization. If your business is listed on the New York Stock Exchange, there will be numerous people you’ve never met who hold a stake in your business through the shares they own in it.

You don’t have to go public to sell shares in your company. You can sell equity to private investors or even have friends and family members put up money in exchange for a percent of your profits. As you hire new employees, equity can be a work perk that helps you win top talent over competitors in the same space. Not only will this give them an incentive to stay with your company, but it will also create an emotional investment in how your business performs. If you do well, they benefit from seeing their shares grow, which incentivizes them to work harder.

What Is Stakeholder Management?

Good stakeholder management is vital to your business’s success. When people have made an investment in what you’re doing, they’re naturally interested in how it does. As the person running that organization, you have an obligation to your stakeholders. You’re no longer the only person interested in how your business is doing, so you’ll need to set a plan to keep everyone updated on how things are going. This starts with a strategy to track your business’s performance, extract the data into reports and regularly communicate that information to key stakeholders.

Start with documentation that conveys to newcomers what your business is, what your goals are and what your policies are for employees and various business partners. If you plan to have quarterly or annual meetings to update stakeholders, document the frequency of those meetings and plan them in advance. You can always tweak the dates later if someone can’t attend. You should make yourself or a key member of your team available for any external stakeholder who has questions in the time between those meeting dates. You’ll also need to regularly follow up on your stakeholder communication plan and make updates as needed.

Project Stakeholders vs. Business Stakeholders

If you look up the meaning of stakeholder management, you’ll likely find plenty of information related to project management. When project managers are asked to oversee a project, one of the first things they do is identify all key stakeholders and loop them in on all important details relating to that project. Stakeholders can also serve as information sources for project managers, who may have questions about the business’s goals for a project. Unlike business stakeholders, project managers are primarily interested in ensuring a specific project stays on track and completes by a designated deadline while also remaining within a fixed budget.

A business stakeholder, on the other hand, has an interest in the overall business. That doesn’t mean stakeholders don’t care about the individual projects within that organization, especially if they have a direct impact on the business’s success. Chances are your project stakeholders are also stakeholders in the overall business, but not everyone who’s a business stakeholder will be classified as stakeholders on every single project you do. Your external stakeholders, such as board members, likely won’t be involved in the day-to-day activities associated with moving individual projects forward.

Crisis Management With Stakeholders

As you’re planning, you should also consider how you’ll handle any crisis that arises. This could be something as simple as a hotly contested online post or something as serious as a defect in your product that causes harm. Part of managing stakeholder expectations is ensuring they are in the know as soon as possible when something bad happens. The worst eventuality would be that one of your key stakeholders learns about your issue on the evening news or through a business associate.

The instant you’re aware of an issue, quickly do what you can to mitigate damage as you also schedule a meeting with everyone invested in your organization. If you have investors or shareholders, they should be your first step, and they should also be a part of deciding how to move forward from here. Once you’ve outlined a plan, hold a mobilization meeting with your employees and anyone else who will help you repair the damage. Transparency is integral to your business’s success once you have stakeholders involved.