The 7 Main External Factors Affecting Business
The external factors affecting business are those factors which a business doesn’t have much control over but which still affect the way entrepreneurs run their businesses.
They happen to be factors which influence whether a business will run smoothly and profitably or whether it’ll encounter unnecessary problems when carrying out its operations.
Today we’ll be looking at the 7 main external factors affecting business.
List of External Factors Affecting Business
External Factors Affecting Business #1: Infrastructure
Infrastructure relates to things like the road network, communication network, power supply network, state of buildings etc.
In general, it refers to the physical structures that are required to sustain the operations of a business although a business doesn’t have much control over them e.g. you can’t repair the entire road network or power supply network.
External Factors Affecting Business #2: Taxes And Government Policies
This includes what you owe the state plus all the regulations that affect the operations of a business and I must say that when not in your favour, then taxes and laws can be one of the most difficult and annoying things that an entrepreneur can ever encounter.
The best way to ensure that your business isn’t negatively affected by the tax law and other laws of the land would be to first do your research before setting up a business in a particular geographical location.
External Factors Affecting Business #3: Weather
Mother Nature happens to be a force that no human can control or contain and given the fact that global warming is on the rise, then the best that every business owner can do is to hope for the best but be prepared for the worst i.e. any natural calamities such as floods and earthquakes.
External Factors Affecting Business #4: Your Competition
As much as every entrepreneur desires to see their competitors in their rearview mirror, no one can control their competition e.g. Toyota can’t tell Nissan to stop manufacturing saloon cars.
The best that an entrepreneur can do is to try their level best to be better than their competition.
External Factors Affecting Business #5: Political Climate
Politics always has a way of affecting the environment of any business and it can sometimes have disastrous effects on a business e.g. political upheavals can see the premises of a business broken into and equipment vandalized or damaged.
On the other hand, the political climate can favour a business to see it gain more customers and expand e.g. when the legislators favour your business, then you’re sure to succeed.
External Factors Affecting Business #6: Customer Base And Their Preference
As much as a business may target a particular niche in the market and persuade that niche to buy products and services from them, the ball at the end of the day is in the customer’s court.
A customer will always have the final word when deciding who to buy from and what to buy from them i.e. their preference. The best that a business can do is to try and make itself more appealing than its competitors.
External Factors Affecting Business #7: Economy
The economy dictates the purchasing power of your target market and so if the economy is shrinking, then your business will also follow suit (unless you’re offering Giffen Goods) but if the economy is growing, then your business will also grow.
No one business has a direct influence on the economy and so all one can do is play their part in growing the economy of their respective country.
My Take On The Above External Factors Affecting Business
The above 7 external factors affecting business are the main ones that I felt affect a business more so don’t be surprised if you come across several other external factors affecting business as you surf the web.
The best course of action against the external factors affecting business environment would be to always be prepared to deal with any and every possible outcome. Opting to bury your head in the sand and hoping the external factors affecting business will pass away isn’t going to help.
The best way to be prepared for any calamities that the external factors affecting business may bring along would be to have certain measures to cushion your business should anything happen.
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