As a business owner, you will need to plan for the future in order to have a smooth sail in times of adversity. You may have a plan that will help you in getting ahead of your competitors when the going gets tough. This is true when the situation is due to some changes which can be manipulated from inside. However, it is also a fact that there are many external factors that are not in your hands and which have a drastic effect on the functions of the business.
A good businessperson is someone who is able to foresee such changes before they happen and take preventive steps instead when there is still time. ‘The external environment’, as it is called in the business world, consists of a lot of parameters that have to be taken into account. These are as follows:
Laws – There are many laws that can affect the business as a whole. They include zoning laws, employment laws, environmental laws, tax laws, etc. It is imperative to know how these function and what the requirements are that need to be fulfilled in order to be compliant with them. However, change is something that is the most common phenomenon in the financial sector. Therefore, one has to be proactive rather than reacting to circumstances. Let us look at some of them in detail.
Zoning laws – Just imagine setting up a whole business and then realizing that you are not supposed to carry out any activities in that particular area any longer. The zoning laws of changed which makes the building illegal. It is such a blow to the entrepreneur. Therefore, take time out and research well. Make sure that there are other companies like you who have invested in the area so that there is no problem in the future.
License – Depending on the business type, you would require specific licenses so as to run a legal establishment. Know all about these and get them ready before starting the business.
Sole or joint ownership – There are some certifications which are necessary to run a certain business structure. If there are a number of stakeholders, the requirement is different and when it comes to sole proprietorship, you will need specific permits.
Employment laws – The future may bring about a change in the employment laws where you cannot hire employees from any other state or country. Places which are sensitive to such variations should be avoided. Furthermore, care should be taken to ensure that they are paid on time and treated with respect.
Environmental laws – If your business needs to be wary of changes in the environmental laws, make sure that the area of production is safe for such an enterprise. With global warming and the decreasing ozone layer, it is not long before some areas will be prohibited from having such units.
Tax laws – Tax laws are different in separate parts of the country. It is advisable to hire a professional who can foresee any changes in the future as they can cause considerable financial crunch for any business.
Internet laws – With the dawn of internet marketing, most people prefer to buy products and services from the comfort of their homes. The SPAM law is an important Act that any online business owner needs to be aware of. Right from the content on a website to an email sent to a prospective client, one will have to follow the rules mentioned in this Act so as to continue being a part of it. One of the most important features is to give a choice to the recipients to block certain websites from sending promotional emails.
Economy – Everybody knows about the debt crisis that the present US government faces. As of 2011, the total outstanding debt is over $14.75 trillion. In order to take care of this, one of the options which cannot be ruled out is to increase the taxes. The interest rates on various loans will also see a rise and this is going to take its toll on many businesses. The dollar value will decrease and this will create a steady decline in demand. There are many reasons for this and the most notable ones include the war on terrorism, increase in spending, etc.
Politics – The party that rules the government makes any changes relating to the country’s policies which may affect a business. Some of the deciding factors are as follows:
1. How stable is the government?
2. Whether it is a democratic or republican candidate that is at the top or it is a dictator?
3. Financial policies which are being introduced by the government.
4. Political situation in the neighboring countries, etc.
The current President, Mr. Obama has proposed to increase the tax structure so as to make the rich pay more. There have been major suggestions made to modify the existing medical insurance policies as well. All these will impact the smooth running of a business. An entrepreneur should be able to predict such changes before they are implemented and ensure that the finances do not suffer to such a level.
Technology – With new inventions being made in the field of technology, it is very difficult to keep up with the changes. If you do not adapt to these modifications, you will be left behind in the competition. The best thing to do would be to imbibe all those which will prove to be resourceful in the long run.
Terrorism, war, etc. – One of the major reasons for the current economic conditions prevalent in the US is the war on terrorism. Trillions of dollars have been spent on this cause which has led to a major debt crisis in the country.
It is important to know everything about the laws that need to be followed in a particular region. These have to be complied with at all times and one has to be well informed so as to sense the future milieu.