Creating a successful business plan is no easy task.

It requires careful research, analysis, and strategic

planning. Factors such as economic conditions can greatly impact the success of a business, making
it even more challenging to create a solid business plan.

Economic Factors to Consider

When writing a business plan, it is crucial to consider the economic factors that may affect your
business. These factors can include the state of the economy, consumer spending habits, interest
rates, inflation, and competition. Each of these factors can have a significant impact on the success
of your business and should be carefully analyzed and addressed in your business plan.

The State of the Economy

The overall state of the economy can greatly influence the success of a business. During a recession,
for example, consumer spending tends to decrease, making it more challenging for businesses to
generate revenue. On the other hand, during a booming economy, consumers tend to have more
disposable income, which can lead to increased sales for businesses. When writing a business plan, it
is essential to consider the current state of the economy and how it may affect your business.

Consumer Spending Habits

Consumer spending habits can also greatly impact a business. Understanding what drives consumer
behavior and how it may change in different economic conditions is crucial for developing a
successful business plan. For example, during a recession, consumers may be more likely to cut back
on non-essential purchases, while during a booming economy, they may be more willing to spend on
luxury items.

Interest Rates and Inflation

Interest rates and inflation can also have a significant impact on businesses. High-interest rates can
make it more challenging for businesses to secure loans and financing, while inflation can drive up
the cost of goods and services. These economic factors should be carefully considered when creating
a business plan, as they can greatly affect the financial projections and viability of a business.

Competition
Competition is another economic factor that should not be overlooked when writing a business plan.
Understanding your competition and how they may be impacted by economic conditions can help
you develop a competitive advantage and position your business for success. Analyzing the market
and your competitors' strategies can also help you identify potential threats and opportunities for
your business.

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Moreover, if you operate in foreign markets, you can’t focus on solely domestic economic
conditions: you have to monitor the economy in every region where you do business. The country
has been constantly facing negative growths due to the general uncertainty, devaluation of stocks,
falling foreign investments and shutdown of manufacturing companies. In this way, you will be
alerted to any upcoming problems within your chosen industry and?will be able to identify sales
opportunities. With higher interest rates, investment has a higher opportunity cost because you lose
out the interest payments. The design suggests a model where the five factors are interconnected and
contribute collectively to economic growth, with the central circle possibly representing the economy
or economic growth itself. The demand curve in Exhibit 1.6 depicts this information. When running
the economic model and budgeting, it is important to make allowance for inflation for longer-
duration projects. By plotting both the demand curve and the supply curve on the same graph in
Exhibit 1.8, we see that they cross at a certain quantity and price. They provide useful information
with reference to the customers and competitors.? Because your business can be influenced by
international?factors,?it is important to understand its influences. Business cycles vary in length, in
how high or low the economy moves, and in how much the economy is affected. How would any
changes in the quality standards or requirements of your job, products or services be affected, and
would the ever-changing technology be an issue. We want to offer a busy and lively atmosphere in
the evenings, and to attract locals and passing trade. Afghanistan and Somalia were among the
lowest-scoring countries on that index. This reduces costs and prices, which in turn supports further
growth. The government does not create job quotas for each industry or give people tests to
determine what they will do. As the diagram shows, government receives taxes from households and
businesses to complete the flow. Demand tells you how much you can sell and at what price —in
other words, how much money the firm will earn to cover costs and hopefully earn a profit. Because
such contractionary measures reduce spending by businesses and consumers, prices come down and
inflation eases. Since 2010, the airport has averaged about 32 million travelers — down from its all.
Also, through policies and laws, the government transfers money to the poor, the unemployed, the
elderly, and the disabled. They argue that companies seek countries with low taxes. Changes in
interest rates hi the headlines so they are easy to spot. Recap from previous session The importance
of the external environment to marketing decision making Scanning the environment to identify
opportunities and threats. Mobile technology allows businesses to communicate with employees,
customers, suppliers, and others at the swipe of a tablet or smartphone screen. Only public limited
companies can finance from the stock market. There are various stages to consider, which are
outlined below. You need to provide evidence that a thorough Market Analysis has been done,
highlighting a need or niche in the market and how the business can fill it. Describe the
environmental forces that affect the company’s ability to serve its customers. Social factors to
analyse are trends in technology, fashion, food, education, religion and politics. Legislation?or
taxation changes that are currently pending could have a positive or negative effect on the business.
He now wants to take his experience and this proven business model and create a world-class golf
venue with luxury leisure facilities and one, two, and three story holiday homes set within a stunning
California location. The flagship of this company is the Shadow Creek Golf Club in Las Vegas. After
continuous and successive consumption of units of same goods, the fulfilment that is experienced by
the consumer starts depreciating. Despite not being an economic factor, management plays a vital
role in the growth of a company by economic values and drives the business to reach maximum
revenue. These factors can significantly impact a business’s survival, but they are beyond its control
as they are external. Learn more about the pros and cons of globalization to understand how it
affects economies and individuals. Infrastructure to and from the site is good by road, and also by
air for patrons with their own helicopter, or those who want to fly in. The 2008 economic crisis led
many politicians to question the merits of globalization. The explosion of McDonald’s and KFC
franchises epitomizes the success of American-style capitalism in China, and Beijing’s bid to host the
2022 Winter Olympics is a symbol of economic openness. New and innovative technologies can
provide opportunities for businesses to incorporate new breakthroughs and inventions to cut costs
and develop new projects. The business will also offer a customization and product sourcing service.
The proposed site is currently confidential, and Mickey is in the process of arranging initial meetings
with the landowners to discuss his venture, as well as his vision for the use of the land. Business
cycles vary in length, in how high or low the economy moves, and in how much the economy is
affected. Different stages of the business cycle reflect differently, and decisions according to the
stage. The producer price index (PPI) measures the prices paid by producers and wholesalers for
various commodities, such as raw materials, partially finished goods, and finished products. Is the
government stable, or might a coup disrupt the country. Dear HuffPost Reader Thank you for your
past contribution to HuffPost. More recently, many companies in the food industry have expressed
unhappiness over regulations requiring the labeling of trans-fat content. The ideal is low inflationary
and sustainable growth. 5. Productivity of capital Long-term changes in technology can influence
the attractiveness of investment. Strategic Planning Purposes Objectives and challenges Business-
Unit Strategies--core competencies Issues in creating a strategy Choosing your battles carefully.
How you spend your money (or save it) is a personal economic decision. Now, there is a lot floating
around in this situation. Read Document About.com Small Business: Canada Your plan will need to
address many other factors, such as payment (international transactions and currency exchanges
Understanding all these facets of international business will transform your Western Economic
Diversification Canada has published a valuable checklist on. If you are seeking support to get your
business going, the SME Centre of Excellence team is here to support you. Taxes are applied to
individuals, consumers, and companies. Some investment is necessary to replace worn out or
outdated equipment. Afghanistan and Somalia were among the lowest-scoring countries on that
index. This can help to boost technology transfer, industrial restructuring, and the growth of global
companies. How should a firm make ethically responsible decision. Customers who have shopped
with the business will be invited to upload their photos on Instagram and, by using a specific
hashtag, will enter them into a contest to win either cash vouchers to spend in store or a free gift.
Successful?marketing means potential customers are aware of what your business does and where to
find you. A company whose costs are greater than revenues shows a loss. It is a great way to
safeguard your business as this process will enable you to be prepared for any kind of surprises
coming from the external factors affecting your work. Businesses want to keep costs low and
revenues high to earn larger profits. You would need raw materials to create the product or service.
We also want to appeal more to families during the day. With higher interest rates, investment has a
higher opportunity cost because you lose out the interest payments. The number of women at all
levels has increased significantly, the workforce has become more diverse, and telecommuting is
more common. What if Nantucket Nectars launched a marketing campaign promoting the health
benefits of fruit drinks over soda. We are also passionate about creating jobs and opportunities for
local people and building robust relationships with local and national suppliers and contractors. For
example, Nike says “Just Do It,” and Tylenol is advertised as being easier on the stomach than
aspirin. By using the factors of production efficiently, a company can produce more goods and
services with the same resources. It makes you think through your next steps and specific strategies
and tactics. These kinds of countries are the ideal place to start a business or company for an
entrepreneur. Will this cost be outsourced to the customer or will it be included in the price of the
product. Gauging demand is difficult even for large corporations, but particularly for small firms.
Because such contractionary measures reduce spending by businesses and consumers, prices come
down and inflation eases. Producing Milky Ways at 50 percent capacity does not efficiently utilize
Mars’s investment in its plant and equipment. Businesses that expect inflation often increase their
supplies, and people often speed up planned purchases of cars and major appliances. Efficient and
reliable transportation systems can facilitate the movement of goods, potentially increasing supply.
Are you able to draw upon unique or low-cost resources that other businesses can’t. Workers had no
reasons to work harder or produce quality goods, because there were no rewards for excellence.
There are many factors that can contribute to an economy’s fall into a recession, but the major cause
is inflation. Business cycles vary in length, in how high or low the economy moves, and in how much
the economy is affected. We aim to establish these products first, and then to launch new products as
the brand gains momentum. And so there is an increase in the cost of raw materials needed for
production. If they aren’t the right fit for the business at the time, you must question their purpose
within the organisation. The broadcasting industry is increasingly concerned about fines being
imposed by the Federal Communications Commission for offenses against “standards of decency.”
The loudest outcry probably came from telemarketers in response to the establishment of “do-not-
call” registries. Coke called its product Coke C2, while Pepsi named its competing brand PepsiEdge.
While searching for a CPA, I was looking for someone who would act as a community partner,
someone to learn and understand how I work as a business owner as well as how we handle our
finances.
Among all the economic factors that are affecting business, development is the upmost important
one. This environment can be influenced by internal and external factors, including economic factors.
With the development of social media, tracking social trends is easier now, in contrast to previous
years. Lower consumer spending causes businesses to reduce production, and economic activity
declines; unemployment may rise. We would also be interested in adding more wines to the menu,
perhaps featuring a wine of the month, or wines from a particular region each month to keep the
menu interesting. Renewable natural resources are those that can grow again or can never run out
and these include trees, water, air, and sources of power like solar and wind energy. For example,
bringing inflation under control may call for a politically difficult period of high unemployment and
low growth. A society must be willing to adapt to changes for entrepreneurs to flourish. Imagine
playing tennis without watching what your opponent was doing. Justify your answer with practical
examples.. Access This Document Into Africa: Opportunities And Risks In The African Legal. Will
potential customers have more or less disposable income available. According to the monetary policy
set by banks, lenders and financial institutions may also restrict loans during high inflation. You need
to research your market, figure out what you need to focus on for your business strategy and then
work out a marketing plan as well. Some of the most popular pubs in the area include The
Devonshire Arms, The Alfred, Barton Turns Inn, and The Anglesey Arms. These pubs have good
reviews. More isolated countries, like North Korea, didn't score on the index at all. It is very popular
with locals and has received very good reviews on TripAdvisor. There are various stages to consider,
which are outlined below. For example, a not-for-profit organization’s goal might be feeding the
poor, preserving the environment, increasing attendance at the ballet, or preventing drunk driving.
Such as, if a person expects his income to increase in the future, then he will spend more money on
the purchase of the luxury goods, durables and shopping goods. Macroeconomics is the study of the
economy as a whole. Support HuffPost Our 2024 Coverage Needs You Your Loyalty Means The
World To Us At HuffPost, we believe that everyone needs high-quality journalism, but we
understand that not everyone can afford to pay for expensive news subscriptions. It is also advisable
to?include a couple of quotes along with a?backup?plan should your chosen supplier not make good.
Companies try to produce their goods and services at the lowest possible cost and sell them at the
highest possible price. Bad weather in 2000 messed the sugar crop in Brazil, arguably the largest
producer of sugar in the world. Chapter 3 Version 6e 9 Ethics The moral principles or values that
generally govern the conduct of an individual. Other factors, like strategic policy decisions, are
directed under management control. If you are making it, how long will production take. The 2008
economic crisis led many politicians to question the merits of globalization. These are all phases that
make up a business cycle that dictates the demand and supply of all goods and services and general
prices of all commodities, whether essential or non-essential. For example, an entrepreneur may be
interested in starting a furniture business, but if the required wood types are not available nearby, the
cost of transporting the raw material would double the expenses.
Economic factors have extremely high importance in business. Drought and floods could lead to
destruction of resources and increase climate related costs. Changes in leadership or changes in
policy of other countries can have a big impact on a business especially if it is one of your biggest
trading partners. If the tariffs remain permanent, so are the economic losses. Although business plan
outlines are variable, usually this step follows the Market Analysis.? It is important to include. With
the advanced technology available today, the world has become one big market. PEST Analysis is a
simple tool which helps analyze?the P olitical, E conomic, S ocial, and T echnological changes in
your business?environment. Plus, you can justify to investors the reason why you are looking for
funding. Producing Milky Ways at 50 percent capacity does not efficiently utilize Mars’s investment
in its plant and equipment. Chapter 3 Version 6e 5 Learning Objective Identify consumer and
marketer reactions to the state of the economy. They are attracted by the opportunity to be their own
boss and reap the financial rewards of a successful firm. The statement should be kept short and
businesslike. The boutique will be decorated in an elegant but minimalistic style. We then say that
money is “easy.” Attractive interest rates encourage businesses to borrow money to expand
production and encourage consumers to buy more goods and services especially more expensive
things like cars and houses which require them to borrow money. Those who are in favor also claim
that trade across borders will help limit military conflicts. At present, the owner covers multiple
functions, but is looking to employ both a shop assistant and store manager in the future. If the tax
rate increases, you may see the opposite happens to the economy. We would work hard to maintain
this level of service, and to make improvements where possible. However, it will make them think
twice about future investment projects. They use their skills and resources to create goods and
services that will satisfy existing and prospective customers. The Alfred is popular with sports
crowds and offers good beer and a welcoming, busy atmosphere. This will form the main socializing
hub for the golf course and its members. To spot trends and other signals that conditions may be in
flux, marketers must continually monitor the environment in which their companies operate. Socialist
countries typically provide their citizens with a higher level of services, such as health care and
unemployment benefits, than do most capitalist countries. When in doubt (and even when not in
doubt), it is always a good idea to ask someone not involved in your?business to read over your
description. Full employment doesn’t actually mean 100 percent employment. Obviously, the
situation for interest rates is of great relation to banking institutions, but it can also affect businesses
whose strategies rely on receiving large loans. To explain the legal structure of the company, answer
these questions: Is it incorporated, and if so, is?it a C or S corporation. To mitigate this risk,
businesses may set aside a portion of their profits for recapitalization. Certain societies are not easily
adaptable to change.
The government can partly counteract cyclical unemployment with programs that boost the economy.
The primary contributor to China’s rapid growth has been technology. When a customer enters the
boutique, they should feel like they are entering an interesting side of the world. Questionnaires If it
is a product that is being sold it is advisable to carry out test trading to see if people will actually buy
the product and asking them to fill out a questionnaire. Would Coke and Pepsi reply with campaigns
of their own. Are the population’s growth rate and age profile steady or are they likely to change.
Mind mapping massively reduces the time needed to prepare and structure your work. Social
Change. Micro Environment is not totally controllable. According to Price-Waterhouse-Coopers,
two-thirds of CEO's of fast growth organizations develop some type of business plan. While still in
the rebuilding stage after Hurricane Katrina hit in 2005, the U.S. Gulf Coast suffered another
disaster in April 2010 as a result of an explosion on the Deepwater Horizon oil-rig, which killed 11
workers and sent more than 3 million barrels of oil into the Gulf of Mexico. First off, you would
need land, a place where you can start your company. Economics is the study of how a society uses
scarce resources to produce and distribute goods and services. For example, high youth
unemployment rates (for workers 25 years of age and younger) in Spain, Italy, and Greece continue
to cause protests in these European countries as elected officials struggle with how to turn around
their respective economies and put more people, particularly young people, back to work.
Understanding the national economy and how changes in government policies affect households and
businesses is a good place to begin our study of economics. If there are many sellers of an
undifferentiated product, competition is considered high. It is also advisable to?include a couple of
quotes along with a?backup?plan should your chosen supplier not make good. Will these items need
to?be purchased,?and if so what will be the costings. Of course this affects companies and
organizations of all sizes regardless of the economic environments they are in. What needs to be
established is: Who they are Where they are How much they cost How big their company is What
their main?strengths?and weaknesses are. For example, if the birthrate declines, fewer teachers will
be needed. They use their skills and resources to create goods and services that will satisfy existing
and prospective customers. Useful opportunities can be: Changes in?technology and?markets on a
broad and narrow scale Changes in social patterns, population profiles and lifestyle changes, etc. The
resulting competition among companies tends to lower prices. It is followed by a recovery period
when economic activity once again increases. As the ordering quantity increases, the rate of discount
will too. Internal factors are those matters of a firm that influences the financial decisions of that
firm. They are often linked, but their area of focus is very different. PESTLE analysis puts a spotlight
on the aspects of your business that you might overlook owing to your daily hustle. They examine
some of the broadest economic choices when discussing the difference between planned economies
and market economies. We aim to establish these products first, and then to launch new products as
the brand gains momentum.
Basically, Market Analysis tends to be more business strategy-oriented, whereas Market Research
falls primarily into marketing. Changing roles have brought more women into the workforce. In
addition, it gives one an indication of the growth potential within the industry, and this will allow
you to develop your own estimates for the future. We also need to ensure we keep an eye on our
competition and what they are doing. This situation is sometimes described as “too much money
chasing too few goods.” The higher prices lead to greater supply, eventually creating a balance
between demand and supply. Learning Objectives. 1. Discuss the external environment of marketing,
and explain how it affects a firm. 2. Describe the social factors that affect marketing. And with all
the companies Carl started, none of them have ever exceeded revenues of a million dollars. The most
recent recession began in December 2007 and ended in June 2009. For example, a predicted
recession would prevent your business from increasing the workforce. A firm that raised its price
even a little above the going rate would lose customers. Conversely, if they anticipate lower future
prices, they may increase supply, shifting the curve to the right. Governments are clamping down on
multinationals who exploit the environment with heavy fines and restrictions. They use their skills
and resources to create goods and services that will satisfy existing and prospective customers. The
stages in this process are Economical Structure, Economic Conditions, Trade Flows, Demand,
Supply Levels, Global Connection, Economic Policies. Our tie-in with Marston’s is also critical to
our operations, and so we would ensure that we work in accordance with the Code of Practice at all
times. Polaroid, for example, held major patents on instant photography for years. Generally, as
production costs rise, the supply of a product tends to decrease, since higher costs can erode
profitability. This market structure is characterized by barriers to entry —factors that prevent new
firms from competing equally with the existing firm. Marketers also have to stay tuned to social and
cultural factors that can affect sales. Our journalists will continue to cover the twists and turns
during this historic presidential election. There is strong empirical evidence that investment is cyclical.
For example, the fast-food corporation McDonald’s makes alterations in their menu as per the
country’s religious norms and regulations. Do not make it complicated.? If a website is already up
and running, include the web address in the plan; if you don’t have one set up but are planning to,
explain the design and any special?functionality features that may apply, such as an online shop.?
Another important factor is who will design it and at what cost. What it means is Carl did not
understand the purpose and the value in creating a business plan. The country has been constantly
facing negative growths due to the general uncertainty, devaluation of stocks, falling foreign
investments and shutdown of manufacturing companies. Companies must then find new ways of
operating more efficiently if they are to keep making a profit—and stay in business. In such cases,
ERC refund services can offer a lifeline for struggling businesses. Then there’s inflation, which
pushes interest rates upward. And Other Reader Questions Should We Worry about China’s
Economic Crisis. Typically, they would be rehired when economic growth increased.