Owning and running your own business is a time consuming and stressful job, and with so many different things within the business to focus on, often it can be hard to keep track of the external factors that can affect your business. Here are the 5 main external factors that you’re business needs to be aware of.
1. Technological Advances
Depending on what business you’re in, advances in technology can have a big impact on your bottom line. Disruptive technologies can make your business or service irrelevant, so keeping track of technological advances in your field is vital to the ongoing success of your business. Kodak is a great example of a company that was not prepared for technological changes in their industry. Despite inventing the digital camera, Kodak decided to ignore the rise of digital photography and instead keep its focus on film photography. This decision ultimately led to Kodak filing for bankruptcy in 2012.
It’s important for any business to know their competitors in order to understand their own position in the market. This means keeping track of current competitors and any new ones about to enter the market. Being aware of competitor’s prices, branding, positioning and sales promotions will allow you to put initiatives of your own in place to try and combat these and prevent other businesses in your sector from taking some of your share of the market.
3. Government Regulations
Changes in Government regulations are something that every business needs to be aware of, both for the positive and negative impacts they can have on your business. Any business that trades internationally needs to be aware of changes to tariffs and subsidies in both Australia and any countries they export to, so they can either take advantage of a positive change or make plans to lower the cost of a negative change.
4. Labor Market
Keeping track of changes in the labor market is important for any company that relies on its staff. Knowing the regulations and rules regarding payment locally, and internationally if your business does work overseas, is vital if you want to make sure you aren’t breaking any labour laws. It’s also important to keep track of what schools and universities are training the skills most important to your business, so you can hire the most skilled candidates.
5. Economic and Geopolitical changes
If your business trades overseas or relies on production/products from overseas, changes in the geopolitical climate can also have an effect on your business. International conflicts and trade embargoes could have an effect on you ability to access supplies as well as your ability to trade with certain countries, so it’s important to be aware of these risks and put contingency plans in place if anything should go wrong. The state of the domestic economy can also affect your business; certain products and services will be less popular during a recession, so it’s important to know how the economy will affect your business.