StrategyDriven Entrepreneurship Article

The External Factors Affecting Your Business

Try as you might, you will never really “own” your business. It is too much part of a bigger network that is too far beyond your control for that. While there might be plenty of directions you want to take your company in, you’ll also be subject to the whims and plans of your fellow humans, who all too often (it can feel like) have plans that are out of sync with your own. Here are just a few of the ways your business can be affected by external factors, to which you only have a passing, observing role.

StrategyDriven Entrepreneurship Article
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Political
A thriving economy relies on there being not too many things rocking the boat. You can see the way the stock market reacts whenever an announcement or decision is made; sometimes it gets a boost, which is its way of saying ‘we approve!’, and sometimes it takes a nosedive, at which point everything gets a bit nervous. With Donald Trump, for instance, no one – including quite possibly Donald Trump – is quite sure which way the economy will go. That one is just for time to figure out, but down the line it could have a knock on effect to your business. A good economy means you’re in the best possible position to succeed. Also, you’ll notice how things can get a bit twitchy whenever there’s political unrest, more commonly when it’s overseas. A destabilised China, for instance, can have effects that spread across the world, such is the way all our economies are interlinked.

Your Business Partners

It’s all good and well keeping your own house in order. It’s all good and well operating at full capacity, with the books in order and things slowly progressing just fine and dandy. But how many other businesses do you rely on for your success? You’re probably more wrapped up in the well-being of other companies than you think. For instance, how does the software you rely on influence your success? You might want to look at a service such as software escrow, which would give you access to the software you depend on should the software company fold. Elsewhere, you could face major difficulties if your suppliers unexpectedly fold. You can’t stop that from happening, but you can make sure you have the contingency plans in place so that you’re able to handle any temporary setbacks relating to stock and so forth. Essentially, it’s important not to be too reliant on any other single company.

Trends

You’re at the top of your game at the moment, right on the cutting edge of what’s new and fresh. You’re part of a movement that is going places! Only, it’ll only be going places up until the time when it’s not. Take a look through history and everything that was once ‘hot’ ended up being pretty ‘not’ in the end. You only need to look at what passed as fashion twenty (or any number) years ago to see that things really do change. Did the people wearing the clothes back then think they’d one day look so lame? Of course not! Did Blockbuster think there would always be a demand for home videos? Probably! Trends come and go. The important thing is to realise that ‘trendy’ doesn’t really mean anything, and that you shouldn’t be relying on it for your success. Always make sure you’re looking to the future, especially if the industry you’re in is prone to change.

External Innovation: Good

Not every external factor is bad, of course. In fact, all the ones listed above can be good if the cards fall nicely enough. This positive change also extends to innovation, which as we all know is essentially what’s making the economy thrive in recent years. And it looks like it’s here to stay. Innovation is creating new markets, new products, new services, new just about everything, and it’s happening all the time. Every year, there are new services that help to streamline businesses and make them less dependent on other factors. You should be keeping your ear out for the developments that will aid your business. Everybody else will, and to not do so you run the risk of falling behind. Make sure you’re reading up on all the best business online blogs and reading your industry magazines; it’ll keep you fresh.

External Innovation: Bad

With that being said, not all innovation will be there to give you a boost. In fact, sometimes it’ll come along and put you right out of business. This has been happening for centuries, with new products popping up that resulted in massive shifts in the economy. We see it today, with Uber versus traditional taxi companies. No matter who you are and how successful your business is, you should always be ready to face oblivion. It’s the way innovation works. If you’re worried about an emerging company or trend, then look at diversifying your business – but do it well in advance. The number of jobs that may be lost – and industries taken of – by robots in the coming decades should be an eyeopener for many business leaders.

Environmental Factors

Sometimes, the factors that affect your business has nothing at all to do with other humans. It’s all about that grand old mother earth, our home. We think we know a lot about the environment, but we don’t – and unfortunately, we’re about to know a whole lot less once climate change really gets underway. A changing climate will affect a lot, from how things are produced (if they’re able to be at all) and how they get around the world. It’ll also bring more extreme weather, so making sure you have business insurance and cloud storage will be essential.

Predicting The Changes
You don’t know what will happen in the world, because no one does. But you can be prepared by keeping on top of global events – not just what’s happening in your industry, but in all the industries that branch out from your own too. We’re all connected in the end!

The Most Common Causes Of Financial Problems In Business

The Most Common Causes Of Financial Problems In Business

As a business owner, it is essential that you stay on top of the finances in your company. After all, no business can get very far without a decent focus on the money itself. If you want your business to enjoy much success long into the future, then you need to make sure that you are taking a good look at the finances. The truth is, there are a few very common reasons that businesses experience financial problems. In this post, we will take a look at some of them. Looking at these should help any business owner put their own business into a healthier position. With that in mind, let’s take a look at the most common causes of financial problems in the business world.

The Most Common Causes Of Financial Problems In BusinessPhoto courtesy of Pexels

Overstock Of Equipment

It is often the way that young businesses find themselves buying plenty of equipment to get the ball rolling. This might seem necessary, but the truth is it often isn’t. One of the most common causes of businesses experiencing financial trouble early on is an overstock of equipment. It can easily happen, and it can cause more of a hole in your budget than you might at first assume. If you think your business might be suffering in this way, be sure to cut down. Sell some of that stock which you don’t need, and invest the earnings back into the company.

Paying Too Much Tax

There are few things as important as staying on top of the legal side of things. It goes without saying that tax is a very important part of this. However, it is often the case that businesses end up paying too much tax. While you certainly do not want to get into the trouble of not paying any tax, you should make sure that you don’t pay too much either. Doing so could land your business in some serious financial trouble before you even know what’s happened. Use the help of a professional like tax attorney Joe Callahan at MCC4Tax. That way, you are sure to only pay what you need to.

The Most Common Causes Of Financial Problems In BusinessPhoto courtesy of Pexels

Dropping Prices Too Early

It is a very good idea to do everything you can to keep your business competitive in the marketplace. That much goes without saying. However, that doesn’t mean that you should place your business in any kind of financial jeopardy. In fact, this is often easily done without noticing. When you are introducing a new sale or promotion, ensure that you don’t take it too far. There have been cases of businesses essentially bankrupting themselves by being a little too generous. Remember: you want to please the customer, but you also want to keep on trading!

Trying To Please Everyone

The fact is,your business will be much more successful if it focuses on a niche. While it might be tempting to try and have something for everyone, it is often not viable. Chances are, you will just end up spreading yourself too thin. Avoid this at all costs by focusing on a central demographic first and foremost. If you have the resources, you can then expand as and when you need to.

How to Raise Revenue for an Entrepreneurial Start-Up

The first step in raising revenue for an entrepreneurial start-up is to outline a detailed marketing strategy. It is important for start-up entrepreneurs to test their assumptions as soon as they can. A big reason for the success of established companies is that they never invest large capital or significant time on any project unless they have determined that it has an overwhelming probability of success. The corporate world taught me that most ideas fail in the marketplace. When this happens, it should fail quickly and cheaply. You just want to make sure that you are not overwhelmingly hurt when you experience this inevitable fact.

Complete the following exercise carefully before you launch your marketing campaign. Accuracy in this exercise will be crucial to your future business success:

1. Decide who is your ideal customer – Most entrepreneurs start with a great product or service idea, but fail in correctly identifying their ideal customer and instead will sell to anyone who buys from them. This is probably one of the biggest mistakes I still see today, especially in the online world.

There are two main reasons you want to determine who these ideal or dream customers are: first, your ideal customers will appreciate your offers and will pay for it based on your value, not price; and second, they are more likely to refer more business your way.


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About the Author

Ajay PrasadAjay Prasad owns GMR Web Team, a digital marketing agency dedicated to helping businesses maximize revenue from internet. He also invests in web-based start-ups. Ajay also operates a seven-figure web based business, GMR Transcription, which he built from scratch and grew it by using strategies that he uses for his digital marketing clients.

Hank Moore

The Big Picture of Business – The Statistics Tree: Understanding Figures and What They Symbolize, Relating Directly to Your Business Success

Business bases much of what it does on statistics. Most often, they’re financial numbers or sales goals. More importantly are the Big Picture statistics that affect every aspect of business growth and success. The way in which the bigger issues are interpreted has direct bearing on strategy and implementation.

Here are some of the most significant statistics that relate to your ability to do business:

Only 2% of the businesses have a plan of any kind. What many of them think is a plan include some accounting figures or sales goals. That is not a full-scope plan. Of the companies who continue to operate without a plan, 40% of them will be out of business in the next 10 years.

Only 2% of those who call themselves Consultants really are just that. That 2% includes all the doctors, lawyers, accountants and engineers… those of us who actually advise. Most so-called consultants are vendors who peddle what they have to sell, rather than what the client companies really need. The answer is for companies to utilize seasoned advisers, rather than coaches and other vendors.

Research shows that change is 90% positive and beneficial. Why, then, do many organizations fight what is in their best interest? The average person and organization changes 71% per year. The mastery of change is to benefit from it, rather than become a victim of it.

92% of all business mistakes may be attributed to poor management decisions. 85% of the time, a formal program of crisis preparedness will help the organization to avert the crisis. The average person spends 150 hours each year in looking for misplaced information and files. One learns three times more from failure than from success. Failures are the surest tracks toward future successes.

One-third of the Gross National Product is sent each year toward cleaning up mistakes, rework, make-goods, corrective action and correcting defects. Yet, only 5.1% is spent on education, which is the key to avoiding mistakes on the front end.

50% of the population reads books. 50% do not. Of all high school graduates, 37% will never read another book after formal schooling. Of all college graduates, 16% will never read another book. Thus, a declining overall level of education in our society and serious challenges faced by organizations in training the workforce. Yet, the holdings of the world’s libraries are doubling every 14 years.

Today’s work force requires three times the amount of training they now get in order to remain competitive in the future. 29% of the work force wants their boss’ job. 70% of corporate CEOs think that business is too much focused on the short-term.

The human brain has more than 300 million component parts. The human brain connects to 13 billion nerves in the body. The human body has 600 muscles. The human body has 206 bones. The average person speaks 30,000 words per day. The average person is bombarded with more than 600 messages per day. More enlightened, actively communicating people are bombarded with more than 900 messages per day.

98% of all new business starts are small businesses. 45% of small business owners are children of small business owners. 83% of all domestic companies have fewer than 20 employees. Only 7% of all companies have 100 or more employees.

The current success rate for organizational hires is 14%. If further research is put into looking at the total person and truly fitting the person to the job, then the success rate soars to 75%. That involves testing and more sophisticated hiring practices.

Retaining good employees, involving training, motivation and incentives, is yet another matter. According to research conducted by the Ethics Resource Center:

  • Employees of organizations steal 10 times more than do shoplifters.
  • Employee theft and shoplifting accounting for 15% of the retail cost of merchandise.
  • 35% of employees steal from the company.
  • 28% of those who steal think that they deserve what they take.
  • 21% of those who steal think that the boss can afford the losses.
  • 56% of employees lie to supervisors.
  • 41% of employees falsify records and reports.
  • 31% of the workforce abuses substances.

On any given day, Americans spend over $33 million buying lottery tickets. On that same day, 99 American families fall below the poverty line. 68% of Americans do not like to take chances. 5% of all Americans go to McDonald’s every day.

99% of American women think that contributing to or bettering society is important. 35% of Americans are involved in community service and charity activities. During the last 3,500 years, the world has been at peace only 8 percent of the time.

Data from the Census Bureau shows that 69% of new companies with employees survive at least two years, and that 51% survive at least five years. An independent analysis by the Bureau of Labor Statistics shows that 49% of new businesses survive for five years or more. 34% of new businesses survive ten years or more, and 26% are still in business at least 15 years after being started.

Small businesses really do drive the economy. Many people believe that businesses frequently fail because there are a large number closing every year. In 2009, for example, more than 550,000 businesses were opened, and more than 660,000 closed. This occurred during a recession. However, during an economic expansion, the number of new businesses would outnumber the closures.

Many people may not realize how many small businesses there are in the country. In 2011, the Department of Commerce estimated that there were 27.5 million businesses in the United States. Only 18,000 of those businesses had more than 500 employees, and the rest were considered small businesses.

29% are still in business at the end of year 10. And the biggest drop comes in the first 5 years, when half of startups go belly up. This shows that the odds are against startups staying in business. The internet home business success rate is only 5%.

7 Primary Factors of Business Failure:

  1. Failure to value and optimize true company resources.
  2. Poor premises, policies, processes, procedures, precedents and planning.
  3. Opportunities not heeded or capitalized.
  4. The wrong people, in the wrong jobs. Under-trained employees.
  5. The wrong consultants (miscast, untrained, improperly used).
  6. Lack of articulated focus and vision. With no plan, no journey will be completed.
  7. Lack of movement means falling behind the pack and eventually losing ground.

What Could Have Reduced These High Costs:

  1. Effective policies and procedures.
  2. Setting and respecting boundaries.
  3. Realistic expectations and measurements.
  4. Training and development of people.
  5. Commitments to quality at all links in the chain.
  6. Planning.
  7. Organizational vision.

Success is just in front of our faces. Yet, we often fail to see it coming. Too many companies live with their heads in the sand. Many go down into defeat because it was never on their radar to change.


About the Author

Power Stars to Light the Business Flame, by Hank Moore, encompasses a full-scope business perspective, invaluable for the corporate and small business markets. It is a compendium book, containing quotes and extrapolations into business culture, arranged in 76 business categories.

Hank’s latest book functions as a ‘PDR of business,’ a view of Big Picture strategies, methodologies and recommendations. This is a creative way of re-treading old knowledge to enable executives to master change rather than feel as they’re victims of it.

Power Stars to Light the Business Flameis now out in all three e-book formats: iTunes, Kindle, and Nook.

Recommended Resources – Whole Business Thinking

StrategyDriven Recommended ResourcesWhole Business Thinking – A Guide To Exceptional Business Performance
by Robert S. Block

About the Book

Whole Business Thinking by Robert S. Block provides operational executives and managers with the insight needed to relate ‘shop floor’ decisions and activities with the organization’s financial future. Robert reveals how to connect the decisions and actions of today with the financial consequences they will have on the organization and how these results will be portrayed with the company’s several financial statements.

Some of the specific topics addressed within Whole Business Thinking include:

  • Financial Statements
  • Business Metrics
  • Strategy Management

Robert concludes Whole Business Thinking with a comprehensive list of business terms and performance indicators.

Benefits of Reading this Book

In order for an organization to be successful, executives and managers must understand how their decisions and employee actions affect the achievement of established mission goals. As financial returns are a key component of every for-profit company’s success, leaders must be particularly aware of the relationships between long-term and day-to-day activities and the bottom line.

StrategyDriven Contributors like Whole Business Thinking because it clearly illustrates the relationship between decisions, actions, and financial outcomes. Throughout his book, Robert places the reader in common business situations and in plain language conveys how various decisions influence financial results. Robert goes a step further by translating those results into the several key financial indicators (performance metrics, balance sheet, income statement, cash flow statement) used by board members, executives, and investors to measure the health of the company.

Whole Business Thinking promotes the alignment of the organization’s mission and values with its decisions and actions. While acknowledging the non-financial contributors of organizational success, Robert’s book focuses primarily on those activities directly impacting financial performance drivers. In our opinion, the reader would benefit from additional case studies highlighting the application of Robert’s aligning principles and practices to non-financial performance contributors.

Whole Business Thinking reflects many of the organizational alignment, strategic planning, tactical execution, and decision-making principles recommended on the StrategyDriven website making it a StrategyDriven recommended read.

Special Offer

Robert has made a complimentary book sample available to StrategyDriven readers at www.wholebusinessthinking.com/video/.