Why stakeholders matter to your business

Why stakeholders matter to your business

Reading Time: 3 minutes

27th April 2021

In the past few weeks there have been 2 major developments in the world of Football. Whether you like football or not the stories behind them show just why stakeholders matter to a business.

I am sure that one of these stories will spring to mind immediately. The dramatic rise of fall of the proposed European Super League, involving the so-called (or perhaps self-proclaimed) big 6 of English football clubs.

The second has perhaps gone unnoticed by many. But by the time this blog is published it is very likely that my team, Southend United, will have been relegated from the Football League after over 100 years.

The 2 situations are at different ends of the football scale and you may think they have nothing to do with your business. But the similarity, and why it matters to you, is the way both ignored the stakeholders of their business.

What is a stakeholder?

Simply, it is anyone who has an involvement in the success of a business. This can be: –

  • Owners or shareholders
  • Employees
  • Customers
  • Suppliers
  • Banks
  • HMRC

The primary stakeholder is normally the shareholders or owner. They make the decisions and problems occur when they forget, or ignore the fact, that other stakeholders exist.

Why do stakeholders matter?

To gain success, businesses rely on all their stakeholders.

In a small business the owners tend to be the shareholders. They make decisions, and often provide the financial support the business requires.

Other stakeholders form a vital role and without any one of them your business is in trouble. So maintaining good, trusting relationships with all of them is crucial.

What happens when it goes wrong?

Let’s take the European Super League first. The owners of the 6 clubs saw an opportunity to increase their revenue by starting a breakaway league. Great for them and great for their shareholders.

Like many business owners they are always seeking new opportunities to grow, and this looked like a huge pay day for them.

But they underestimated the other stakeholders.

Customers (or supporters) were totally against the idea, seeing it as pure greed by the owners of the 6 clubs.

Other clubs within the football league saw their collective agreements being ripped apart.

Even the big TV companies refused to back the idea.

The whole thing blew up in their faces. They alienated their stakeholders. There is now a total mistrust of the owners. Far from finding the proverbial Goose that laid the Golden Egg, they are now fighting for their own business survival.

And what about Southend United?

Well, a slightly different tale. Of course, the club does not have the riches of the Premier League sides and this is not a personal attack on the chairman. 

But whatever the finances are, the club have taken liberties with HMRC, by getting into arrears with PAYE payments, and failed to pay their players at times.

They have taken two stakeholders for granted. And the result has been an imposed transfer embargo, so they could not sign new players.

No matter what the players say, it must affect their performance, after all who can perform at their best when they are worried about whether they will get paid at the end of the month.

And then there’s the supporters. The mistrust of the club’s owners is now imbedded. Whether their mistrust is based on fact or thought (and I have no idea) the club has failed to communicate with them. 

This has led to a distance between the club and its supporters, which creates further mistrust.

Protests are now being made and the general feeling around the club is unhealthy.

Ultimately it has ended (probably) in the end of their football league status.

Why is this relevant to your business?

Ok, so these are two slightly extreme examples, but there is a moral to the story.

In both instances the owners of the business ignored the stakeholders and have suffered as a result.

Without them your business will fail. Work with them and you have a far greater chance of success.

That is why stakeholders matter to your business.

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