Three reasons why stakeholder engagement is important for small businesses

You might think that there is no need for your small businesses to consult with anyone about becoming more sustainable. You’re doing the right thing, right? Yes, but people need to be on board with the changes, otherwise they just won’t work. So stakeholder engagement is an important tool that all small businesses should use when making changes within their organisation.

But what do we mean when we say stakeholder engagement?

Who are our stakeholders?

In short, a stakeholder is someone who affects or is affected by your company’s products or activities. This is going to include people who are both inside and outside of your organisation.

You definitely need to include your employees, your customers, your supplies, and people who invest in your organisation. You should also include representatives from your local community and any local non-profit organisations that you partner with. What about including organisations that you would like to work with in the future?

There is no magic list of who to include because your list will depend upon your business, its impacts and your aims. The list will likely change over time as your industry and the external environment evolves.

What counts as engagement?

Like identifying your stakeholders, there is no one perfect way of engaging your stakeholders either. Engagement can take the form of a single informal meeting or it can be an ongoing formal process, like organising a stakeholder advisory board which meets regularly. What’s important is that whatever approach you take, it appropriately responds to your needs as a small business and that you learn from and build upon the experience.

Now we know exactly what we are talking about, what are the three reasons why stakeholder engagement is important for small businesses?

It builds long-term partnerships, mutual trust and confidence

The opportunity to be in regular contact with those who affect the growth of your small business the most should not be ignored. You should use the engagement opportunity to bounce around ideas and understand the ways in which change may impact upon your stakeholders. Conflicts and challenges can be resolved effectively through a developed sense of trust.

It results in increased financial resilience

There are a number of studies which show that small businesses which intentionally build stakeholder trust are more financially resilient. Regular stakeholder engagement provides a clearer picture of the macro forces which may affect your small business.

It can improve your competitiveness, decision-making and legitimacy

Those who are aware of their stakeholder’s interests are more likely to avoid crises because they can better anticipate risks and opportunities. Due to their size, small businesses are far better placed than larger organisations to respond swiftly to stakeholder needs.

Stakeholder engagement done well acts as a cushion to protect your small business. But it can take a lot of time to do the process right. Grow Business Solutions have years of experience facilitating large groups and we can help your small business with this process. Please email us at hello@goodbusinessesgrow.co.uk for a no-obligation chat to see how we can work together.