Stakeholder Communication Basics

As someone who is at the helm of a startup, you’re likely of the view that business development is your religious duty and that ensuring effective communication channels perhaps comes much later in the priority list. So why even think about it right now?

However, here’s the thing: business development needs two main elements - outreach and ability to execute. Both of these depend a lot on ensuring effective communication.

Who do you need to communicate with? Your stakeholders.

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Who exactly are your stakeholders? A stakeholder can generally be described as an individual or entity holding an interest or share in a project, a business, a venture etc. A stakeholder can be internal or external and can include clients, employees, investors, as well as other segments of the corporate community. However, one needs to understand that a stakeholder is a member who can influence, be influenced by or be impacted by the results of a particular venture.

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For example, in the healthcare sector, stakeholders could be the patients, medical staff, insurance providers or any regulatory agency. Naturally, these stakeholder groups' interests and degrees of influence over the project are different and therefore, engagement with each group may require a different approach. It is essential to identify your stakeholders early on for the success of your business.

Let’s look at each of your stakeholders and examine how and when you would need to communicate with them and what’s the best way to do that.

‍Equity Holders

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They are the first in the list, since they hold a direct “stake” in your business. If your business is shaped as a company, these are your shareholders. Most corporate laws mandate communications with the shareholders in the form of required resolutions, annual general meetings and annual reports. Given that in early stages your shareholders will most likely be your co-founders and angel investors, it’s always advisable to maintain continuous communication with them. 

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Your co-founders will most likely be in the management board too, but even offline, co-founders have to be communicating almost all the time, to ensure that the operations are being carried out smoothly. A particularly unwanted outcome of less coordination between the co-founders is that employees can start to take advantage of it.

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Your angel investors probably have information covenants in the shareholders agreements through which they are entitled to certain ongoing information about the business. However, there’s no harm in going out and sharing little victories with them like a fantastic review from a lead customer, a significant media mention etc. Often all such things are mentioned in pitch decks at the time of fundraising, but forgotten to be informed to investors later on.

‍Management and Advisors

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In the initial stages, you might be taking help from a lot of advisors on various aspects. It sometimes leads to the formation of a two - tiered board: an executive board of directors or a basic bod who will be involved with day to day decisions and an “advisory board”. Companies with famous advisors often flaunt this by displaying their advisory board on their website.

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It also leads to a proper process where some matters are run through the advisory board for their strategic recommendations and then brought before the executive board at a bod meeting where steps are planned out for tactical implementation. 

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However, the effectiveness of this process depends on how matters are communicated to these forums. There should especially be proper processes to place potential business proposals and potential issues like fallouts, litigation etc. promptly before the board to ensure structured decision making and action. Else, in an absence of structure, as a CEO, someone may even end up taking impulsive decisions which can cost the business.

‍Employees

It’s often pointed out that managers who do not take time out to communicate with the employees end up failing. Employees will either take such a manager out to ride or will simply lose any motivation to do what they are supposed to be doing.

Lack of communication also means lack of clarity - maybe the employees aren’t even clear about what is expected of them. If you don’t take time to talk to them once in a while and understand where they are coming from, what fuels them and what frustrates them, you’re going to be unable to find out where they are likely to shine and you might end up setting them up to fail.

No one in the world can produce better results individually than they can produce as a team and especially as a business, you need to be able to bring your team with you. The communication needs to be frequent and clear.

Suppliers and customers

We knew of a smart service provider. He reached out to the customers not on their business anniversaries, but on his own, thanking them for their contribution in how far he had come in the last year. How often did you communicate with your suppliers and customers for matters important to them, other than their business dealings with you? And this, of course, does not include the once in a year ‘seasons greetings’ card, because everyone in the world does that - there’s nothing unique. Keep asking after them. Celebrate their victories. Communicate your small victories to them. It matters. A lot.

‍Followers and people interested in your business

For obvious reasons, no business today can disregard the importance of social media in business development. 

If you only use social media handles at times where your business acquires funding or gets a licence or receives an award, you are going to be forgotten quite soon. But if you keep communicating with people in general and keep sharing events which bring you joy as a business owner, people will relate to you, understand your cause and might even turn into stakeholders later on. As Simon Sinek says, “People don’t buy what you do, they buy “why” you do it.” But unless you communicate your “why”, you’re not going to be able to convert potential customers into actual customers. 

In a nutshell, it pays not only to keep continuous communication with stakeholders, it pays to keep communication continuous to convert people to stakeholders.

Determining who within your organisation should handle communication is crucial. It could be the CEO who acts as a spokesperson, the marketing team who may be involved with brand building and if the organisation is structured, it may even have an investor relations team who manages the messaging that the company wants to put out to potential investors.

In part two, we will discuss specific communication tools and strategies. We will also explore common challenges CEOs might face, such as dealing with conflicting interests among stakeholders or managing communication during a crisis. Stay Tuned!

And while you are at it, keep your communication with us too! If you implement some of these strategies for stakeholder communication, be sure to write to us about whether these worked for you! We will be eager to hear about your experiences.

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