External Factors That Impact Your Business and How to Overcome Them
There are many factors that impact your business. Some are well-known and can be easily navigated. Others, however, remain hidden; but when they do rear their ugly heads they throw your business into chaos. External factors are identifiable but when or if they will hit your business is harder to predict. This means that even though we know what they are, unless we have a plan for what to do when they pop up, business is hit hard.
To help maintain the balance, there are certain things you can do. Identifying external factors and creating an action plan is a great start; "upskilling" with business admin courses is another…
#1 Technology As a business, you will rely on technology for more or less everything. From connecting your bank account to payroll, to people doing their work, to projects being delivered to clients, to customers buying or contacting you online. It's great…when it works. When it doesn't… well, it isn't fun to think about but you MUST think about it.
Internally, you can proof your technology to a certain extent, but there are external technology factors over which you have little control. It takes a brave business to honestly predict what will happen when technology malfunctions but this is exactly what the thinking is behind Chaos Monkey. Throw a spanner in the works, and see what happens. And then when you know what can happen, you can make changes and adjustments. This isn't a one-off action, but something that big companies do all the time. Try it…
#2 The Economy, the markets, the money… The global economy impacts your business, as do the national and local economies. Understanding this is all part and parcel but doing something about it is more difficult. No, you can't stop the conflict in another country or solve the housing crisis or fluctuations in the stock market but you can have your finger on the pulse, you can diversify, you can forecast and project.
#3 Banks stop lending From time to time, access to capital becomes restricted when the markets are not stable. If your lending stream dries up to a trickle or a bank calls in its debt, what do you do? Come crashing down, possibly. Again, you need to understand the market conditions in which you trade and have a daily update on your vulnerabilities and strengths within it. As your business grows, this responsibility grows which is why the best plan is to get financial advice from someone with knowledge and expertise, like an accountant.
#4 Weather Weather?! Really?! Take a look back at the weather over recent years: it can be a joy, long hot summers means more ice cream sales and you supply the flavourings to ice cream manufacturers OR long wet summers where no one eats ice cream. Or your business premises flood, you lose stock, you lose data, your website is offline… are all your eggs in one geographical location?
#5 Changes to the locality You can't control the developments around you all the time. Some are good, some are not so good. But if there is a big shopping centre being built next door, is this an opportunity or a threat? If it's a threat, what's your plan?
#6 Changes in the law You manufacture backless booster seats but the law says that very soon, in the UK, they are going to be illegal to use. In one swoosh of the statute book, your business is wiped out. Unless you have seen this coming and changed the design. Unless you have jumped on the marketing bandwagon and offered discounts to those who buy your car seats with backs when they traded in the soon-to-be-illegal backless booster seats…
#7 Trends, fads, and fashions They can make or break a business. They come and go with lightning fast speed and can be the most difficult to predict. Trends, fads and fashions all impact your business. A celebrity says 'use this!' and people can flock to buy your product or celebrities (and others) say 'don't use this!' and your market can disappear in one tweet, one poster campaign, one Facebook post.
#8 Your customer base dwindles and changes You may sell to a niche market. What happens when that market is saturated or dwindles away? Have you courted new markets? Have you new channels to explore or will your business disappear with every customer that disappears?
External factors can be identified and, although you cannot predict when or if they will affect your business, you need a plan in place in case they do. What's yours?