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Description A business needs resources such as funds for inventory, marketing, equipment and R&D activities to grow. These funds are acquired by attracting stakeholders. Most of the business risk is shared by stakeholders, which include investors, venture capital companies, banks and bond holders. However, the risk is also shared by suppliers, customers and employees. If a business shuts down, suppliers might lose chance to collect their account receivables. Customers might realize that they are stuck with out dated products and employees might lose their salary inflow and livelihood. It is difficult to attract shareholders for new companies rather than the established one. The prime reason for this is that a new company has higher risk. Decrease Downside Exposure To attract potential stakeholders to the new venture, one way is to minimize downside exposure. For instance, non transferable R&D costs can be replaced by the off-shelf technology to reduce cost. The capital cost investment can be minimized by getting alternative machines that work generally for other purposes as well, thereby increasing their liquidation value. The marketing cost at initial phases can also be decreased by opting for less expensive tools. The risk associated with employees can be decreased by choosing standard trade tools and operations. Customer risk can be reduced by offering them with a product that is compatible with standard products. These actions will help to reduce the risk associated with the stakeholders and will make business attractive to them. Find Risk Tolerant Stakeholders A business needs to find stakeholders who can bear the downside risk. These shareholders are experienced with startups, diversified, risk takers and have high capacity. The stakeholders with startup experience better understand the downside affects and its rewards. The diversified investors are those who invest in different ventures. Risk takers are the people who are comfortable with the high risk associated with the startups and like it. High capacity stakeholders have less opportunity cost and thus they have lesser risk in startups. Among all of these, risk takers are the best stakeholders for an initial business. Maintain Stakeholder Commitment There are times when a stakeholder wants to break the commitment and leave the organization. For instance an employee may get a better counter offer for another job and may leave the business. For such cases, the owners of businesses should properly follow up with their stakeholders and should facilitate them if such problem occurs.
Read More: http://www.researchomatic.com/stakeholders-136071.html
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