Wider business influences – what a PEST!
With the pending EU referendum and wider global economic uncertainty, the summer has started off on an unsteady footing for many businesses. This got us thinking here at Agenda… Whilst you may be doing everything right in your business internally; putting growth plans in place, keeping a tight grip on your finances, developing innovative solutions for your customers and generally doing a great job with the things that make a difference to your bottom line, you still can’t account for wider influences and the impact they might have on your business’ growth.
Business owners are well-accustomed to the term SWOT analysis, and may even perform one on an annual or more frequent basis. But what about a PEST (Political, Economic, Social and Technological) analysis?
With this in mind, here are some things you may wish to consider over the coming months.
Political and Economic influences…
Clearly the EU referendum is having a substantial impact on businesses at the moment as uncertainty surrounding the debate is causing many business owners and individuals alike to put big decisions ‘on hold’. The outcome of the vote will also have far reaching implications across the UK economy, with many business sectors potentially being directly affected.
Outside of the EU, the US election campaign rumbles on. With global markets having already reacted to the potential of Donald Trump heading to the White House, the progress and eventual outcome is highly anticipated and will undoubtedly have a globally-felt impact.
Whilst it is difficult to plan ahead before any decision is made, it will be important to be able to react quickly along the way. The best advice to business owners during times of economic instability is to keep nimble, try to avoid putting all your eggs in one basket and be prepared to ride the storm!
Social and technological…
Socially, pensions remain a big issue. Small businesses will likely be feeling the impact of auto-enrolment over the coming months if they haven’t already implemented scheme. Long with the introduction of the living wage earlier in the year, we have seen the impact government legislation can have.
Human resource cost is the single biggest cost to many businesses and any widespread changes that have to be made can therefore have a significant impact on a business’s bottom line. Whilst such changes and their associated costs are unavoidable, it may be sensible for business owners to look at other ways of saving on staff costs. For example, the cost of losing and therefore having to recruit new staff can have a significant price for businesses in terms of lost productivity and any associated recruitment fees. Keeping staff happy should be something all business owners, but particularly those that have labour-intensive businesses, have a plan for. Try to think creatively about staff retention – it isn’t all about money; staff incentive programmes, competitions, sporting and social activities can all lead to improved staff morale.
And beyond…
Of course another factor that is ever present but often overlooked by business owners until it’s too late is competitor activity. Whilst it is easy to be all consumed by your own business, we’ve all seen competitors seemingly spring out of nowhere and take market share. You only need to look at the UK supermarkets sector – once the domain of the ‘big four’ – now with Aldi and Lidl firmly ensconced as part of the British public’s regular food shop. Whilst competition can be a positive influence, businesses can only take advantage if they are aware of the newcomers! Try to keep an ear firmly to the ground, both locally to your business and through sector news/publications.
Although a bit of a whistle-stop tour, the above commentary will hopefully give some insight into the wider influences businesses face and a few thoughts on how to prepare and tackle such issues. Of course, having a solid business and a tight rein on your finances can help businesses to ride the storm of uncertainty and times of wider change. Agenda’s business consultants help business owners to create robust business plans and sustainable business processes, both of which can go a long way to building a solid financial foundation.
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