What Are the 10 Economic Factors That Affect Your Business?

StrategyDriven Strategic Planning Article | What Are the 10 Economic Factors That Affect Your Business?As much as one might believe the success of their business solely relies on the work they put into their business, there are many outside sources that come into play. Inevitable economic factors, for instance, can make or break your company. Below are several examples of ways your business can be impacted by the state of the economy.

1. Supply & Demand

One of the top economic factors that affect business is consumer supply and demand. As the demand for certain products or services increases, the supply for such begins to decrease. This can lead to inflation, which increases the monetary value of such items until (and if and when) the demand decreases. Some businesses might struggle to keep up with the demand.

2. Recession

A recession can trigger layoffs, higher prices, a surge in unemployment, and as a result, lower consumer spending. In turn, businesses may struggle to bring in sales.

3. Minimum Wage

An increase in the current minimum wage increases how much a business must spend on staffing employees. As labor costs increase, this might lead to lay-offs. In severe cases, a business might have to shut down completely if they can’t keep up with the costs of labor and still bring in good profit.


4. Laws & Policies

Laws and policies set by the government surely affect businesses. If the government, for instance, decides to ban a certain product from being sold, this immediately impacts any business who’s selling it.

5. Inflation

As consumer demand increases, this leads to the increased costs of goods. Inflation directly affects the money supply and purchasing power.

6. Tax Rate

The current tax rate, whether it be sales tax or a special tax levied on certain goods or services, can affect the total price a customer must pay when buying from a company.

7. Government Activity

Government activity such as promoting a certain industry or removing trade barriers can either decrease or increase a business’s overall success. Such activities can change consumer demand, increase competition, or lower/increase business expenditures.


8. Interest Rate

If loan interest rates increase, this decreases a nation’s cash flow and lowers its liquidity. The opposite is true if interest rates decrease.

9. Unemployment

The higher the unemployment rate, which often comes with a recession, the harder it will be for a business to keep up with supply and demand. In extreme scenarios, sometimes businesses have to increase wages/benefits to encourage more people to apply and to stay with the company.

10. Exchange Rate

The current exchange rate has a direct effect on international payment. Thus, it can change the prices of goods, as well as the demand for such goods to international customers.

Conclusion

The economy has an effect on each of us in some shape or form. Economic factors, from inflation, to unemployment, to a change in the tax rate, can impact businesses of all sizes. In the end, we must work with, not against, the current economic state if we wish to start or continue to run a successful company.

 

The Benefits of a Business Plan Service

StrategyDriven Strategic Planning Article |Business Plan |The Benefits of a Business Plan ServiceNot every business has a business plan, not because they don’t need one but because they don’t have the skills or knowledge to create it. That’s where a business plan service can help, these services offer a professional solution to business planning, so you get it right first time.

More Clarity

Not having a business plan doesn’t mean you can’t run a business, but the chances are your business will miss out on efficiency and a host of other benefits that go with having a core plan. For one thing, you will have more clarity which can lead to better decision making in key areas.

Whether it’s an investment, personnel, leases, or resourcing, you can make decisions faster and better when you can look at your business performance over a period and see how it aligns with your business goals. A business plan service can help you develop or update a business plan.

Better Marketing

If you have an excellent product, you need to get it in front of the right people; this requires some industry insight and proper planning. If you want to improve your marketing, then identify your target market and ideal customer persona; you also need to carry out market analysis.

All of this goes into your business plan, so you know exactly who to target and when. A quick glance at your business plan during key periods of the year gives you the solid information you need to make intelligent marketing decisions. This also helps when needing to secure funding.

Funding Support

Whether it’s a bank loan or outside investment from a venture capitalist, you need a business plan with some solid numbers to support your pitch. An investor will need to know your valuation of the company, how you arrived at that valuation, and why you need funding going forward.

Although this section of the business plan is important, not every business owner knows how to calculate the finances of the business and write it out in a way that’s suitable to investors. That’s where a business plan writing service can be useful; they can assist with outlining the numbers.

Better Structure

Without a business plan, a company might suffer from structural inefficiencies that can affect the bottom line. A good business plan should include who works in the business, what departments they manage and what their key skills are, which creates a useful framework for the business.

Not only does a business plan create a structure that helps to strengthen the business internally and flourish, but it also helps to create clarity from the outside. Investors can then look at the business and understand how it works, giving them more confidence to part with their money.

Better Hiring

If you don’t have a business plan, chances are you will bring in the right people at the wrong time leading to inefficiencies that can be avoided with some proper planning. Get it right, and a business plan can assist with hiring the best talent to take the business forwards when required.

9 Key Elements of a Flawless Gym Business Plan

StrategyDriven Strategic Planning Article |Gym Business Plan|9 Key Elements of a Flawless Gym Business PlanTo run a successful business, gym owners must do more than purchase exercise equipment. They must determine which type of clientele they’ll serve, whether they will require a membership or allow drop-ins, and more. A gym business plan becomes of great help in ensuring nothing is overlooked when establishing and running the operation.

The plan serves as a formal document that outlines the different aspects of the business. It determines how the company will operate and what steps will be taken to ensure its success. A well-defined plan, while not essential, helps businesses secure capital and grow their organization. Gym owners need this document along with tips for digital marketing, great employees to represent the business and more.

How is This Document of Help?

The plan serves as a road map for the organization. It shows where the business currently is and where it would like to go. When writing this plan, owners often find they come up with new ideas for their venture and see where improvements need to be made. What may one learn when they create the plan?

The plan becomes of great help in analyzing the market and determining what makes a gym a success. With this information, it becomes easier for the owner to determine the best path forward and obtain the funds needed to grow and succeed.

This plan begins with plans for allocating resources, hiring personnel, and marketing, among other things. Writing these things down helps to fine-tune them. Additionally, writing the plan out provides an individual with a better understanding of the industry as a whole and which resources are needed to start out and grow the business.

Writing a Business Plan

When writing this plan, the individual must know where they are at and where they want to go. How do they plan to get there? Some gym owners choose a lean start-up plan while others want a traditional document. The lean start-up plan is good when the owner wants to see all relevant details of their business quickly and easily. However, financial institutions require a traditional business plan before lending money to a person.

Elements of a Detailed Business Plan

Business plans contain several elements, and creating this document takes time. Work on one task. When it is complete, move on to the next. If this method is used, the gym owner is less likely to become overwhelmed and give up.

The Executive Summary

The executive summary of the plan includes a description of the company and summarizes the market analysis. With this information, a person can explain why their business is needed and where it fits in the existing market. Only highlight the important parts in this portion of the document. Go into further detail later in the plan.

The Business Overview

Include an overview of the business. This detailed description provides information about the gym, the target audience, and how the organization differs from others. In this portion of the document, the owner should include the gym goals and strategies that will be used to achieve them.

Market Analysis

Next, include the market analysis that was conducted. Explain where the gym will fit into the existing industry and current trends that could increase the odds of the gym succeeding. Include data that back up any assertions made in the plan.

Competitor Analysis

Along with the market analysis, a competitor analysis is needed. Learn the strengths and weaknesses of direct and indirect competitors. Include gyms that are similar to the one you operate along with those that function as gyms but differ in one or more ways. Speak to individuals to learn why they chose the facility they use and what they would like to see in their existing gym or a new one. Show how your gym can meet the needs of customers.

Products and Services

A detailed plan needs to provide information about the products and services to be offered. Share information about membership options, exercise equipment, personal training options, and group classes. If child care will be offered or special training sessions, include them in this portion of the plan. Show how these products and services meet the needs of the target audience.

Marketing

Marketing plays a key role in the success or failure of a business. A business may advertise, seek sponsors, or offer loyalty programs to bring in customers and generate revenue. Include as much information as possible on how clients will be acquired and retained.

Personnel

Financial institutions want information about the key personnel in a business. They would like to know their experience. This includes the fitness experts and those who will handle administrative tasks. A gym needs the right people to ensure it succeeds. Add bios and an organizational chart showing these key people. Furthermore, include compensation and benefit plans, as they play a role in a gym’s ability to attract and retain talent.

Outside of rent, labor is the biggest expense for most fitness club operators, so having the right compensation is critically important. Break down your management and staff profile, along with their compensation and benefits. Financial institutions want to know their money is being spent wisely.

Financial Projections

Provide financial projections in the plan. Existing businesses should share a copy of their financial reports for the prior year and projected revenue in the coming years. Market research becomes of great help when providing this data. To show this information, create financial projections that include standard business financial documents, such as balance sheets and income statements.

Create these documents for the coming three-year period showing both the best and worst-case scenarios. Show how the figures presented in the documents compare to industry benchmarks, and reference start-up costs, debt payment schedules, and payroll expectations.

Funding

Share resources that may be used to fund the plan. This could be a bank loan, a soft loan from family or friends, personal savings, and other resources. Explain where the funding will come from and how much will be needed.

Every new business comes with challenges. A detailed business plan helps owners deal with these challenges. It serves as a reference when making critical decisions and becomes of help when funding must be secured. A business owner feels confident moving forward, as they know they have a complete understanding of their venture, and employees appreciate knowing this document is in place. They believe this provides them with more job security.

Each business is different, thus each plan will be unique. Create a plan that meets the needs of your gym. Individuals who do so find the plan serves as a blueprint to move their business forward and grow.

What strategy is (and what it isn’t):

StrategyDriven Strategic Planning Article |Strategic Planning|What strategy is (and what it isn’t):Strategy, Oh what a lofty word. High-minded. Mysterious even conjuring wizards behind the curtain. Military generals hidden in a secret bunker calling the shots. The simple word “strategy” can be added to just about anything to make it sound more important or thought-out, strategic relationship building is still just going to a cocktail party or out to lunch with a potential client.

Despite it’s overuse, strategy is still vitally important. Just the act of thinking about something, breaking it down and making a plan, is a thing of beauty in and of itself. Strategy is The Plan, the 360 view. It’s how all the pieces fit together, and what will hopefully result from our actions or reactions.

It turns out a lot of people have a lot to say about strategy. Every conflict ever known has figured in some kind of attack or reaction. Survival depends on it. And so does ours.

Sir Lawrence Freedman of Oxford University is one of the world’s preeminent international scholars on politics and war. His 2013 book, Strategy: A History, which took 40 years to write, is the best book ever written outlining the entire history of the development of strategy.

Freedman writes, “So the realm of strategy is one of bargaining and persuasion as well as threats and pressure, psychological as well as physical effects, and words as well as deeds. This is why strategy is the central political art. It is about getting more out of a situation than the starting balance of power would suggest. It is the art of creating power (emphasis added).”

When a client or manager or CEO asks, What are we doing here folks? we are the ones who’d better have an answer, and preferable a well-crafted document.

One of the most well recognized books on strategy is from the British military historian B.H. Liddell Hart. In his book, Strategy, he defined the concept in the very literal sense as “the art of distributing and applying military means to fulfill the ends of policy,” distinguishing strategy from, on one side, “tactics” — the modes of “actual fighting” on the battlefield — and on the other, “grand strategy,” in which civilian leaders set high-level policy and coordinate the nation’s resources toward a collective goal.

There is a temptation to confuse a vision or policy with a strategy, but they are not the same thing. Policies address the “what.” They’re prescriptions for the way things might operate in an ideal world. Strategy is about the “how.” How do you move toward a desired end, despite limited means and huge obstacles? A policy may have an implementation strategy behind it.

Strategy is often associated with high-level decision makers — generals, presidents, corporate titans — but the basic challenge of, in Theodore Roosevelt’s words, doing “what you can, with what you have, where you are” applies just as much when working from the bottom up.

Saul Alinsky, a hero of the labor movement and a patron saint of union organizers, made the claim that strategy is agnostic about who is currently in power. In his book, Rules for Radicals, he wondered how to use these same concepts of high strategy to wrest power from the oligarchs and tycoons and give it to the people. Alinsky believed the right strategy would allow anyone to wield power.

There are different interpretations of strategy. Beverly Gage is a history professor at Yale University, where she just resigned in a furor from the Brady-Johnson Program in Grand Strategy because of donor pressure over the curriculum. She writes, “The original concept of strategy comes from the world of military affairs. It derives from a Greek word meaning ‘generalship’ or ‘the office or command of a general’: it was an enterprise for the man in charge.”

Any strategic challenge in our daily life, both personal and professional, requires contending with limits and obstacles: scarce resources, structural constraints, devoted enemies and fickle allies, chance, and luck. The plan is a thoughtful prediction.

My belief is simple, strategy is all about creating something greater than it’s parts. Something bigger than yourself with the limited resources of Time, Money and People.

Don’t just leave the strategy to others. If you see a better path forward, outline the strategy and lay it out there. Sure it’s risky, but it’s better than nothing. You just might find yourself a wizard behind the curtain.


About the Author

Matthew L. Moseley is the president and founder of the Ignition Strategy Group and the author of Ignition: Superior Communication Strategies to Create Stronger Connections by Routledge publishing. He is a world record adventure swimmer and lives in Boulder, Colorado.

7 Growth strategies to improve your bottom line

StrategyDriven Strategic Planning Article |Growth Strategy|7 Growth strategies to improve your bottom lineIn business, it’s all about profit and loss. The numbers are important.

A top line and bottom line is a form of that financial analysis. These names are quite easy to form an idea of their understanding for anyone. The top must mean something positive and the bottom must be some bad news. This presumption is not half wrong.

The top line refers to business growth. It’s a measure of a company’s ability to market and sell its products against its competitors. More revenue means that the company has more to spend on advertising, marketing and new product development.

The bottom line, on the other hand, is a company’s net income, displayed at the bottom, hence the name. It is an important indicator of overall conditions in the company’s target markets. However, mainly businesses want to improve these numbers. And by that they mean, they want to decrease the bottom line which is referencing the operational and overhead costs for the business.

Growing revenues and reducing overhead expenses is the simplest way to improve the bottom line. But a lot can be included in this one statement.

Here are some strategies that can help:

1. Adjust Pricing

A customer wants the cheapest product they can find at peak quality and businesses need revenue. There is always a place for compromise.

Re-evaluate your pricing strategy. If sales are high but revenue is low then increase the prices of products where it is fair to both the business and the consumer. If sales are low then try to analyse the reasons that can be changed and decrease the pricing where there is room.

Analyze the price margins and evaluate if the current prices are truly covering the costs of the overhead. Do periodic research on both, the product and business competitors, to keep the pricing optimum with change.

Make sure you are aware of any fees you are paying for using different payment platforms, as these should be forming part of your pricing structure. If you are unaware of the actual cost of the fees, this can eat into your profits. Use a Paypal fee calculator if you accept payments via Paypal to help you set your pricing.

2. Market Smarter, Not Harder

There are various digital marketing services today that help regulate better marketing strategies for the business. Incorporate them.

This is one way that businesses can increase both the top line and bottom line at the same time. Focus on acquiring only the best customers through social media campaigns, and stop spending money on low-value customers. Do some research, think about who is most likely to benefit from your product or service, and then consider how to reach out to that group of people. Market to those customers that will surely invest in the business, not the masses.

Segmented marketing campaigns have a better chance at bringing in customers to the business rather than untargeted trials. Marketing should always be targeted towards people who are most likely to buy the product or services and generate more sales at less cost.

3. Create Conversions

Once the digital marketing campaigns are drawing traffic to the website, the next main thing to do is to regulate the conversion rates for bottom-line growth. Not all the investment should be done on getting traffic to the page, if there is no conversion then the visits are wasted.

Make the landing pages easy to understand and engaging and cover the same points as the campaign that brought the visitor there. Ensure some or the other form of data or commitment from the visitors so that better campaigns can be channelled to them again.

Do not focus alone on getting traffic on the page, after a point those efforts should be shifted towards conversion. Know the shift, and accordingly, change.

4. Upselling and Cross-selling

Cross-selling and upselling are surely very time-consuming practices but they bring significant improvement to the bottom line. Upselling is the practice of encouraging customers to purchase a comparable higher-end product than the one in question, while cross-selling invites customers to buy related or complementary items.

While finalizing a deal with a new customer, suggest other products or services that the company offers that would go well with what they’ve purchased. Upselling is a little harder to do without seeming greedy so make sure to keep the main goal of providing the best value to the customers clear in mind. Customers should never feel like they’re being sold to.

Cross-selling options are a great way to bring the customer’s attention towards other products that usually complement the one in question. Showing statistics like “usually brought together” or “x% of viewers of this product also looked at this” helps convince them of the purchase subtly and also gives them a sense of community.

5. Tighten Credit terms

Credit terms are simply the time limits businesses set for the customers to pay for their merchandise or services received. These are important because cash flow is very important for a business to sustain. Longer credit terms mean the business will have to wait longer for the cash inflows.

This is why the credit terms of the business should be designed to improve cash flow. Having multiple delinquent client accounts is a sign that a company’s credit terms are too loose. This can seriously affect the bottom line and create cash flow problems.

Try revising the general terms and charging late fees or interest on unpaid invoices. Many businesses try to give customers special discounts and coupon options if they choose prepaid options or pay within a specified period through affordable instalment plans. This provides the customer with an incentive to pay quickly which in turn improves cash flow.
can also encourage clients to reliably send in a check for services rendered.

6. Automation

Sure, robots aren’t taking over yet. There are various steps in business that need improvisation so automation isn’t going to replace manual labour. But that is not to say that automation doesn’t still have many benefits that should all be taken advantage of.

It brings efficient work, integrated systems, and better processes. It reduces errors, reduces delays in the business process, improves the speed of customer service processes and helps provide the rest of the team valuable time to focus on other strategic tasks.

Whatever can be automated or outsourced to a trusted service for less money than the cost of the company’s own time should be automated. Initially, an investment in the technologies that enable automation will look like another expense, but the benefits are cumulative and businesses who embrace workflow automation can see big results in their bottom line.

7. Employee Training

With budgetary restraints, most of the time the first thing to move to the bottom of the list, if not completely off it, is employee training. An underrated protocol that businesses usually overlook. But, it has many long-term benefits that go unnoticed due to ignorance.

Having trained professional employees who know what the scope of their jobs are and who are held accountable for their productivity can save companies thousands of dollars each year. Any employee is a part of the team and should be an enthusiastic brand representative, whether in office or not. A strong training program focuses on developing functional skills, improving company processes and streamlining strategic goals.

It assists in ensuring savvy customer service representatives and productive team members. This also helps businesses to understand and track the employees that excel from the ones that may be underperforming.

Conclusion:

Scheduling time to closely examine all company expenses and business costs can truly help realise where money can be better invested. Always calculating the return on investment for every action can truly make a difference in cutting costs and improving the bottom line.