Starting and growing a business in the UK can be exciting yet challenging. With over 5.5 million small and medium enterprises (SMEs) in the UK, competition is fierce.
In 2021 alone, over 772,000 businesses were started in the UK.
While entrepreneurship can provide financial freedom and personal fulfilment, about 50% of new businesses fail within the first 5 years.
So how can you set your new business up for success? One crucial element is identifying and managing your stakeholders. But what exactly is a stakeholder? Let’s break it down in this beginner’s guide.
Who are your business stakeholders?
A business stakeholder is any individual, group or organization that can affect or be affected by your business. Unlike shareholders who have a financial stake in your company, stakeholders have an interest or concern in your business.
Your stakeholders may include:
- Employees
- Customers
- Suppliers
- Investors
- Government agencies
- The local community
- Trade associations
Essentially, if a person or entity has an interest in the success or failure of your business, they are a stakeholder. For a start-up business in the UK, key stakeholders typically include your employees, target customers and investors providing startup capital.
Why are stakeholders important?
Identifying and managing relationships with stakeholders is a crucial part of business planning and operations. There are several key reasons why stakeholders are important:
- Stakeholders can directly impact sales and revenue. Keeping your customers and clients satisfied and Targeting your products and services to their needs leads to repeat business.
- Stakeholders affect reputation. How you interact with customers, employees, suppliers and the community impacts public perception. Maintaining positive relationships builds trust.
- Stakeholders influence productivity. Employee satisfaction leads to higher retention and performance. Keeping investors and financial backers happy ensures funding for growth.
- Stakeholders shape strategy. Understanding stakeholder needs helps define your business plan, vision and development roadmap. Their input and feedback guide strategic decisions.
In essence, managing stakeholder interests allows you to operate sustainably and successfully. Ignoring key stakeholders may lead to loss of support, sales and growth opportunities.
How to identify your stakeholders
Performing a stakeholder analysis is an important early step when starting a business or launching a new project. Here are some tips on how to identify your key stakeholders:
- Brainstorm a list of all possible stakeholders: Start broad by listing all individuals or groups who may be impacted by your work.
- Segment by relationship: Group stakeholders into categories like customers, suppliers, regulators, staff and community.
- Prioritize based on influence: Which stakeholders have the most impact or interest? High-priority stakeholders will require greater engagement.
- Map out their roles: Understand stakeholder roles, needs and motivations. Connect how they may contribute or be impacted.
- Consult experts: Talk to mentors, partners and colleagues to ensure you have a complete stakeholder map.
Keeping an updated list of stakeholders and their expectations will allow you to actively manage relationships and align on shared goals.
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How to manage your stakeholder relationships
Once you have identified your business stakeholders, the ongoing work begins – actively managing those relationships over time through effective communication and engagement.
Here are some tips for managing your stakeholder relationships:
- Set regular meetings to better understand needs and seek input on company direction.
- Establish clear policies and processes to address common stakeholder requests or complaints.
- Share progress updates and company news to maintain transparency with stakeholders.
- Develop a stakeholder engagement plan to prioritize outreach based on influence and interest.
- Design personalized communications for different stakeholders to convey relevant information.
- Build long-term relationships, not just short-term transactions. The added value keeps stakeholders loyal.
- Thank stakeholders and acknowledge their support, feedback and teamwork.
- Monitor changes over time. Conduct periodic stakeholder reviews to identify new influencers.
By continually engaging with stakeholders, addressing their needs, and involving them in key decisions, you can align your business growth with shared stakeholder success.
Final Thoughts
Identifying and managing your stakeholders is essential to starting and growing a business in the UK. Taking a strategic approach allows you to create your business plans around delivering value to not just shareholders, but also the employees, customers, suppliers and communities that have an interest in your company’s future. With a commitment to understanding stakeholder needs, your business can build a strong foundation for sustainable growth and shared prosperity.
