When it comes to owning a business, as an owner, one must understand that there is nothing promising in business. It can grow successfully overtime or get destroyed in a moment. Thus, the business owner must learn to be adaptive to the constant changes happening within and outside the business to ensure sustainability in the market. For example, let us take the recent incident that shocked the business sector. Did you guess it?
Yes, the Covid-19 pandemic. During this period, several businesses across the globe were affected. Unfortunately, a few of them were so badly affected; that they had to shut down forever. For example, some small retail operators functioning on their day-to-day customers could not survive during the lockdown period and had to shut down.
However, at the same time, some business entrepreneurs found alternative techniques to survive through this period. For example, shops that could not facilitate the online business module took orders over the call and delivered them to their doorsteps.
This is just an example of how an unexpected obstacle changed the business module. Thus, it is necessary for the owners and managers to make wise decisions to tackle the situations; as it comes. However, owning a business means one should have a forecasted plan and backed up solutions to anticipated obstructions. Being proactive in business will help develop instant solutions to unexpected barriers.
Here, we are going to discuss some external factors that can directly or indirectly affect the operation of the business.
What Are the External Factors That Affect a Business?
Technological Factor
Indeed, this is a crazy space, if I may say! The advancement of technologies is gradually happening and to match its speed is next to impossible. While this is benefitting a few businesses, for some; it is becoming a challenge.
Here is an example of this; a company that specializes in making GPS devices for a car company would face a decline in their business. Why? if you may ask, it is because modern phone devices have an in-built GPS technology.
However, they can overcome this challenge by producing new products. In times like this, organisations can also get financial help such as business loans Australia, for example, has used this technology to improve their healthcare sector. They integrate these modern technologies to keep track of their patients and stay updated at all times, for better care and treatment.
Legal Affairs
When the political officials change, the legislations are also likely to change. A few legal legislations that can impact the business are as follows:
- Taxation
- Law of Employment
- Tariffs and custom regulatory
- Import and export restrictions
- Market regulatory
- Competition law
- The property laws
It is highly necessary that the businesses comply with the latest legislation and keeps the legal matters up to date, this is the only way to survive in the market safely!
Economic Factors
The economy is a major factor that affects the business in it. For instance, if the economy is declining and unemployment rises, the businesses have to tackle this situation carefully. Hence, for example, in this case, they would have to increase production and also adjust the pricing to a lower cost so the consumers can purchase it.
Conclusion:
Factors that affect a business include the economic climate, competition, consumer preferences, and technological advancements.