Business planning is important for direction and success.
A key area of the planning process involves considering factors that could have an impact on the success of your business.
These might be external industry or environmental factors or internal factors such as your own strengths and weaknesses. Any of these factors can provide opportunities or pose threats for your business.
External factors are those influences, circumstances or situations that a business cannot control that affect the business decisions that the business owner and stakeholders make. The are a large number of external factors can have a direct impact on the ability of your business to achieve its strategic objectives.
For example, if the government changes the laws regarding the types and numbers of goods that can be imported and importation costs increase then this may make a big difference to the viability of your online business.
It’s important to regularly monitor the macro factors that affect your business and industry and to respond to them in a way that is appropriate to your business.
These external macro factors can shape your business’s opportunities and pose potential threats:
- Economic conditions, e.g. employment rates and trends, interest rates, disposable income trends
- Technological advances, e.g. changes to how consumers use and purchase products/services, i.e. use of devices/tablets to buy items, how technology impacts the way companies source and supply goods
- Cultural and social forces, e.g. increased number of women in the workforce has had a positive effect on online purchases
- Political and legal factors, e.g. changes to work health and safety laws and regulations can impact on how companies conduct their business
- Seasonal/climatic factors, e.g. businesses selling seasonal items, such as ski gear or swimwear, are likely to be affected by climatic conditions
- Environmental factors, e.g. consumers can research information and compare options when purchasing alternative power sources.
Remember all these factors, trends and forces should be assessed with respect to your products/services to determine relevant threats and opportunities for your business.
Consider each of these external factors and reflect on the impact they might have on your new online business – does the factor present an opportunity or a threat to your business?
Thinking about all you have learnt so far about Jordan’s online destination wedding travel business, what do you think is likely to be the biggest external threat to her proposed business? Respond to the following online poll to record what you think is the greatest external threat.
Post and discuss your choices in the Comments section
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