When managers consider all the details in managing a department, business or company, often the focus is on managing the labor force and things that are happening within the company or organization. In addition to dealing with the day-to-day details, however, businesses must respond to external factors and realities of the external environment as well.
There are multiple external realities that can influence the evolution of a company and a few that can affect even small businesses are as follows:
Shifting market conditions is one of the most immediate and seemingly constant external factors that influences how a business changes and evolves.
A century ago, while the market was still changeable, it did not change with the constant shifting that we experience now. Fads, trends and consumer wants and needs change so rapidly now that even small businesses are affected by constantly shifting market conditions.
A business must stay on top of industry changes, as well as stay educated about how other industries, politics, resource availability, etc. can influence shifts in market conditions. It is as important as effort to keep a finger on the pulse of your target market in order to tend to shifts BEFORE they happen, if possible.
New developments and new competitors also influence the growth of the average business.
- How a business responds to these new competitors or new developments in product or service delivery will be key to how well the business survives.
- Pay attention to both existing and new competitors by staying on top of what is going on in your industry, community, town, etc.
- Networking and participation in conferences and workshops can help to stay abreast of what is going on in the world as it pertains to the workings of the business.
Additionally, changes in government regulations or policies can have a direct (and indirect) impact on businesses. These are external factors that can often change without much warning-zoning laws and new policies, regulations or laws that come from a local, state or federal level can be both beneficial and detrimental to a business.
It is important to pay attention to ballot measures, elections and other governmental realities-whether you choose to get involved with issues that matter to you and your business, or you simply need to make adjustments to the business in order to comply, it is imperative that a business owner or manager pay attention to how the government impacts and influences business operations.