Businesses across sectors all influence the community or environment they operate. It doesn't matter the mission or vision of the founder or founders; no business operates in isolation. Even in the basic business concept, there are customers that every business idea wants to target.
So with that established, it is now clear that every business has stakeholders.
What is a stakeholder?
Popular business dictionary Investopedia describes a stakeholder as an individual or party that has an interest in a company and can be either affect or be affected by the business. Customers quickly come to mind, as well as stakeholders.
People use stakeholders and shareholders interchangeably in regular conversations, but that isn't right because they do not mean the same thing.
Shareholder and Stakeholder
A shareholder is a person or group that owns at least one share of a company's stocks. Shareholders are stockholders because they own stock in the company; they are partial owners of a company and are entitled to a share in the particular company's profits.
While shareholders can be stakeholders, they are not the only stakeholders.
Who are the stakeholders in your businesses
Along with shareholders and customers, other stakeholders in your business might include employees, communities, creditors, government, competitors etc.
We will group stakeholders into two types: internal and external stakeholders, to better understand this.
As the name implies, internal stakeholders are those with direct involvement in the business. Employees, owners, managers (team leads).
These are stakeholders who have indirect involvement in the business. The involvement might be through a business agreement (partners, creditors, suppliers etc.), regulation (government), competitions, an interest in the product (customers) and an interest in the impact of the business on the broader community (community).
Why is it important to know your stakeholders
A business becomes genuinely impactful when it satisfies the needs of all stakeholders. It's not just about profits-which is pleasing to only shareholders- but are your employees happy? Do customers love your products, and what are you doing to help the community around you?
Having all stakeholders at heart is what sustainability in business means. For a business to be said to be sustainable, it must impact the environment and society, and it's impossible to do that without satisfying all your shareholders.
Businesses that truly want to be sustainable and have an immense impact should start by conducting a stakeholder analysis. Stakeholders are slightly different in each industry, so stakeholder analysis is the first step to understanding your stakeholders and determining their hierarchies of importance.