5 EXTERNAL FACTORS THAT AFFECTING YOUR BUSINESS

A business is affected by internal factors such as employees, production, finances, etc., and external factors, like competitors, regulations, etc. For a business, keeping a close eye on the external factors that affect its workings is essential.

5 EXTERNAL FACTORS THAT AFFECTING YOUR BUSINESS

Here are 5 external factors that affect a business. 

• Political factor

For a business to work effectively and ensure its success, it is essential to consider the political factors. The political factors comprise the ruling party, its agendas, policies it is likely to bring in and follow and so on. For example, if the ruling party focuses on policy formulations to ease the working of small firms, it threatens the prominent, leading businesses. Therefore, it is necessary to consider political factors and then plan and formulate business strategies accordingly. 

• Social factor

Society comprises the people or, let's say, your customers. Let us suppose you are a brand manufacturing designer clothes; in such a business, you need to provide customers with the latest designs and fashion trends regularly. If you fail to provide the same products as the customer's taste, you might lose a customer.  Therefore, it is essential to be updated regularly with the societal needs and changes to ensure regular profits for your business. 

• Technological factor

Technological factors refer to technological advancements. For a business and individual to survive, it is essential to remain constantly updated with the latest technological trends. Being updated with technology not only helps the business gain customers but also reduces the cost, time, and effort needed to perform tasks. 

• Economic factor

Economic factors refer to factors such as interest rates, inflation, unemployment, export and import regulations, currency fluctuations, etc. These factors are likely to influence the savings and incomes of the consumers, thus directly affecting their spending patterns. Therefore, it is essential to understand the economic factors before making strategic business decisions. 

• Legal factor

Legal factors relate to the laws, rules and regulations. While liberal rules make it easier for businesses to run their operations, strict rules and regulations make it difficult for businesses even to survive. 

For a business, controlling the internal factors is easy, but controlling the external factors is difficult. For a business to reduce the impact of external factors, it is necessary to consider them and their effect on the business before planning and strategizing.