National Factors are factors that affect every business across the country (e.g. Taxes, exchange rates).
The Government could impact my business in a good and a bad way, as it could increase the national minimum wage or decrease it. Increasing the national minimum wage would force a start-up business to pay their employees more money, negatively impacting my business, also you have to pay 5p for a plastic bag now instead of being costless. Decreasing the minimum wage would allow my business to pay their employees less money, so either my business or the owner makes more money – more profit or spending the extra money on other services of my business.
Taxation includes a variety of different taxes that a start-up business would have to pay for, the main taxes are income tax, national insurance, VAT and corporation tax. These taxes would be collected by Her Majesty’s Revenue and Customs (HMRC).If there is an increase in corporation tax has the same effect of making an increase of business costs. Decreasing the tax costs would boost the economy by boosting the amount of spending.
Cost of boring is interest and other costs that my business could occur with, it is the borrowing of funds. For example loan companies such as QuickQuid and Wonga add interest on to what you originally owed them, if you borrow £500 from Wonga they add £175.18 in interest so you have to pay 675.18 more then what you originally owed them. It would help them by finding the best interest rate on a loan, also paying back their loans would give them a good credit score. If my business cannot keep up with the payments for loan companies my business’s credit score will go down, if this happened lenders may be more inclined to not accept your request as the higher the credit score the less of a risk it is to the lender, and if you have a low credit score you’re a risk to the lenders.
Exchange rates is the value of one currency converted to another country’s currency. Exchange rates could be good for my business as they fluctuate up and down regularly. Depending on where I get my supplies from it could mean that you could pay less money than other countries. Exchange rates could be bad for my business though as if my suppliers are in a different country, their money might be worth more than my country’s currency value so I pay out more money. So it will impact your cost of supplies and decrease profit.
Employment Rates is the percentage of labour force that is employed. If there is a high unemployment rate this would affect my business by: lower consumer spending, demands for cheaper products, possibly higher crime rate, lower morale and de-motivation, employees less likely to find other jobs. If there is a low unemployment: consumers have a higher income, it is harder to find and recruit workers without offering a better work package, lower crime rate. Also if there is a high unemployment rate then I can pay them minimum wage, instead. The impact of this on my business would be that I would be able to keep more money for myself or the business.
Local Factors are factors that affect businesses locally not nationwide (e.g. Location, Competitors).
The location is where my business is based (e.g. Warehouse, Highstreets). Location may help my business by being in a high-street is that you get a high customer rates, and if you were in a warehouse it would help as you could get more stock in your business. Location may not help my business though as your rent of your business might become higher depending on where you’re based, like a highstreets, also being in a high-street it means that you might have limited entrance and exit points for supplies.
The suppliers is whether are not you choose local or worldwide suppliers, and how they shall reach you whether its delivered by air, sea or land. Having a local supplier may help your business by cutting prices for travel costs of the suppliers, and you might get recognition from the other business and set up a deal between your business and the other one possibly a 10% discount etc. Having a supplier from another country means that you might have to pay extra money to the supplier to deliver it as it might come from air and sea too. Also items might get damaged through the procedure of delivery.
The competition is what businesses are in your local area and what they sell, whether or not it’s the same as yours. Competition may affect my business in a good way if the competition in the area is low, meaning that there is less of a competition to get the customer to come to you. Also the prices of my businesses near you, may be costing more than yours. Competition can harm my business as it means that my business might have a lot of other businesses in the area affecting how many sales my business has. Also if another business has a sale on they are likely to get more attention than your business unless you lower your business costs. Competition can provide new opportunities for businesses as if there are not many businesses in your area you can also expand and also get more revenue from sales as there would be more customers coming to your stores.
Resources are a group of factors such as Premises, staff, equipment, stock of goods, location of suppliers and customers too. If your premises is a shop, office, workshop, or industrial unit. The appearance is everything for a small business so if your appearance looks good and presentable, then you should get more customers at your shop. Having a good appearance could help your business by increasing customer visits. However it could affect your business by lowering customer visits as they think my business is run down and not operating properly. Having Wi-Fi may boost visits too.
Staff are also resources, staff could damage my business by if they are living far away then that means that the staff would either have to take more time to get to work. Also they could help my business if unemployment rates are high in the area, then labour costs are also possibly going to be lowered. Equipment and other supplies are items that you may sell or need to sell them. If the items are large then you may need to rent a warehouse to store your items harming my business as you shall need to spend more money on renting the warehouse. However if you are an Ice Cream shop owner then you will only need a cold room helping a business as you could have this on your own premises. Customers are a resource and if your shop is a “visit-in” shop then your image of your shop is and how it looks outside is important. Also your location is (e.g. high street or industrial estate), that is what you should focus on, if your customers are further away and you travel to them, (e.g. I you’re a dog walking company) then your aim is to keep travel time and costs down.
How changes in the current business environment are likely to impact upon my business
Some changes in my business environment that can affect new businesses are taxation (corporation taxes), Cost of borrowing (interest rates), Exchange rates and suppliers and resources.
One change in my business environment that could affect my new business is the cost of borrowing. Recently the interest rates went up, meaning it is great for savers, but bad for loaners. This is relevant to my new business as my business may need to take out a loan to start up a business. This change means that my business will have to pay out more money, with interest added on. The impact would be that my business would have to pay out more money then what the loan money they originally would need to pay them back, meaning they would make a loss. The rise was 0.25% going from 0.25% to 0.5%.
Another change in my business environment that could affect my new business is taxation (corporation tax) from 1st April 2015 there would be a single corporation tax of 20% for companies with less than £300,000 in profit, and has now switched to 19% for the year 2018 and 2019 in 1st of April, this means the impact will affect my business in a good way as it means they will have to spend less money affecting their businesses’ revenue less. Also the government wants to change it again by 2020 the percentage will go down to 17% this would be even better for a business as it means they would have to spend even less money.
One more change in my business environment that could affect my new business is suppliers, especially Brexit, currently we are still in the EU meaning that we get some benefits. These benefits include import tax, we currently don’t have an import fee when we buy items from the EU. This means that we don’t have to pay fees when importing products helping a business especially my new business with less money to spend. Also you can send your workers to the EU without having to have a work permit, however this could all flip and impact a business badly when the Brexit agreements go thorough as it is uncertain what will happen right now.
Social trends such as social media has increased the use of e-cigarettes and vaping also cigarettes are being banned in more places, thus meaning the decline of their usage and the rise of vaping. Furthermore as social media videos of vaping have become a trend they have made small business become more renounced and gaining more popularity. Also they are becoming more popular through the evident use of idols and stars on social media platforms using it. Using social media may increase my business popularity as I could promote my business on social media.
Another trend such as technology would affect my business as there is a decline of visits in store, and an increase of online shop’s being visited. In this I could take advantage and make an online store for my business and keep my in-store shop, in doing so I could make twice as much profit. I could possibly make twice as much profit as I would be able to broaden my target audience and customer range.
How current trends in the business environment will impact my business
There are trends that would affect new businesses, these trends are titled under social trends, environmental trends, ethical trends, technology trends.
One social trend that would affect my business is population, population is a trend as it goes up and down but for Essex it’s going up as it’s more popular. If my new business started up in London and people are moving in to live in Essex, it means that it could help a business as they have a bigger social pool of people looking for work, as people are now more willing to travel further to work. However, it could affect a business as people, if they are travelling further they may want my business to pay for your travel costs, causing a possible dispute between employer and employee or it means you will lose some of your profit paying for his travel costs. Furthermore it could harm my business as if there is a strike on a train service, an employee may not be able to come to work or have to come in later on in the day. More families in Essex could help a business as it means that there would be a higher population creating a higher demand for jobs. However if the mother of the family works with your business then they may have to take maternity leave meaning you will have to let them take 52 weeks of, and your business will have to pay her 39 weeks of her salary, harming your business as you will lose one of your employees. Generally the more populated an area is there shall be more professionals (businesses). Also an area with more professionals could harm a business as they might sell their stock for less money, or have more sales then you. Furthermore it generally divides the how many customers you get as there are more businesses for people to be intrigued by and not just your business.
Ethical trends that could affect a business are carbon footprint, responsible sourcing and animal welfare I am going to talk about carbon footprint and responsible sourcing.
The carbon footprint is calculated by the amount of emissions produced by an activity. The aim of the of the government is to become ‘carbon neutral’ by using less energy and compensating for unavoidable use such as, planting trees for trees which were destroyed, or making an initiative scheme to provide renewable energy in developing country’s such as China. In a result of pollution in London, the mayor of London has decided to restrict the access of diesel vehicles in an effort to reduce our carbon footprint. The government’s plans to become ‘carbon neutral’ could harm a business such as an automobile company that deals within the City of London as they want to revise what vehicles can enter the city limits without being charged for the pollution caused, vehicles that could be affected are diesel vehicles. Company cars will have to pay £3,650 extra a year for using the capitals congestion charge zone harming a business. So the more company vehicles your business has, the more money your business has to pay, so if you have three company cars then you shall have to pay £10,950. This would harm my new business in London badly as if they don’t have support from other companies or family then they will make a massive loss in their fast year. However this may help a business as the new charge may mean that businesses may be diverted away from the City of London, allowing my business to grow more freely.
Responsible sourcing can affect a new cosmetic store too as governments and the general public have started to care about how cosmetic company’s using their products on animals first before releasing the product to the general public. If you are a business in the cosmetic industry and you test your products on animals, then this could harm a business as it could cripple sales for my business as consumers boycott the products and service due to animal testing. This actually has happened before. It happened to a cosmetic company called ‘Nars Cosmetic’ the company announced that they would go back to using cruel methods of testing back in July 2017 as they were going back into the Chinese market. Consumer’s boycotted my business as they tried to back there point but the boycott supporters thought they were excuses. However if I don’t use animal testing it may help give your company a boost of popularity as customers care about their cosmetic usage before being bought. Also although the big debate between whether or not it’s acceptable testing on animals actually cured some diseases such as Polio in the north of America. However responsible sourcing would affect my business, as my business is a cycle store. If I create my bikes out of wood I would have to be responsible about the amount of wood I might use. As if I had a high customer demand for bikes made out of wood I would be intentionally cutting down more trees. In order to be responsible and be taking care of my sources, I should plant two trees for every one tree I harvest for the production of my bikes. Also if I produced my own cycle clothing, then I should find alternative ways of testing to use, as there are charities and organisations that might try to take my business down. I could instead use these methods of testing: researching with human volunteers, and using human-patient simulators (High-Tech simulators), I could use human volunteers (if they agree) to see if there is any side effects of the clothing – if it causes any rashes, or severe side effects. I could even use high tech robots to simulate a crash on a bike while wearing my businesses clothing to see the results and whether or not its consumer ready.
Environmental trends are things such as renewable energy and recycling, most people are aware of negative effects of consumer and commercial actions on the environment such as over-fishing. People know that the earth’s resources will run out at some point and sustainable energy is important and that pollution of any type is bad. Using a non-renewable energy source such as deforestation and overfishing could be harmful to my business as you can be fined and the amount that you would pay varies as some Scotsman’s business were fined £720,000 for fishing fraud and another brit was fined around $1,780.
Technology trends are things such as improved technology, use of social media, and the decline of use of high-street shops. The decline of high-street shops usage could harm my new business starting up in the high-street as customers are spending more time shopping online which could affect my business’s sales and the amount of customers they get. However if my new business starts up in the online industry, the decline in use of high-street shops would be helpful to my business as more people are spending money online so you are more likely to create more profit. Improved technology such as robots could harm my business as they might become more expensive, and if you’re a start-up business you might not be able to afford it, also your company could fall behind to competitors stock if they have the technology, meaning my business could possibly loose popularity, customers and sales, eventually meaning a decline in profit to costs. However if you can afford it means that you could replace workers with the robots so you keep more money. Also if I’m a new business and your target audience are elderly and you make a jump to using technology such as an internet website their might be a technology gap between the customers as most customers can’t get past technology or hate it harming my business with a possible loss of sales.
How two trends would impact on my business
One trend such as technology that will affect my business is the currently the use of AI and Robots, I could take up on this trend by using these robots. Using these robots would be a good opportunity for my business as I could be able to produce more stock in less time, and have less people working in my business, meaning I could save money (as I wouldn’t have any manufacturing workers to pay) and have a bigger turn-over at the end of the year. However this could be a risk as I would have to pay out the sum of money to buy the AI in the first place. This prices might vary and be expensive, affecting my turn-over at the end of the year by creating a substantial loss. Furthermore it would be a risk as I would have to employ programmers which I would have to pay the money from my business with. Creating a potential loss. Also if there is a nation-wide power cut this would be a risk as I would have to stop production as the AI robots would be working off the power grid potentially making the products the AI were making at the time non-profitable as they might be not be up to standards required, however the likelihood of this huge failure happening is very low as my business should have a backup generator. On the whole this would be a great opportunity for my business as I would be able to make more profit as my business would likely make more money as the production of bikes would be increased most defiantly, then the losses I would make by acquiring the robots and setting them up. Furthermore using AI/robots could be an opportunity to get ahead of my competitors as I would be able to make more stock then the competitors in my business category.
Another trend such as social is Uber loss of coverage in London as they have lost their license and rights to be used in London. This would affect customers badly because there was a huge demand in London as there is an estimated 3.5 million people that use Uber in London. This would affect the customer as so many people used the public service instead of Taxi’s. There was a huge demand and now it has gone so a massive amount of people will have to result to using Taxi’s boosting the Taxi business. Uber would have to adapt by this by having to appeal to the Transport for London, even though they decided to not renew their private hire licence. The disadvantage of this trend is that Uber may possibly loose popularity after this disaster, also it would affect their annual turn-over. However it may even broaden their range of popularity as the news of this has been on every news and telegraph. I could use this trend to my advantage as the fact this service has lost their licence, the people that used to use the service would have to resort to other forms of transport like cycling. Cycling is one of the least expendable forms of transport in London, so the chances of people cycling are higher. This would be an opportunity for my business to get more sales and a bigger annual turnover.
Assess the current risks, opportunities and trends in the business environment for my business
My business ‘Cycle Chains’ depending on succeeding has risk, opportunities and trends that could all impact the success of my business.
Risks – one risk that could affect my business would be whether or not I should take a loan. Taking a loan currently would be a bad Idea, as interest rates have risen meaning people who take out a loan will have to pay twice as much interest as they would have to before because of the rise in interest. This is a risk for my business as they may not be able to pay the lender back. Resulting in my business making a loss. Another current risk for my business is Location, this is a risk as depending on where you locate your business it impacts your customer in-shop sales, your delivery process and how you get your stock as if I’m in a warehouse on an industrial site you may be able to buy your stock in bulk for cheaper, also being in based in London would could be bad if you don’t have the sales to comprises with it as in London there is a new diesel tax charge soon to be coming impacting lorries, trucks and some vans as if your business location is within the governments desired perimeter for the tax charge, it could damage your businesses turn-over as you would have to pay £3,650 for each company vehicle you own, and possibly if another delivery company delivers your stock to your business then the delivery company may ask for money for compensation on the tax charge. Furthermore choosing the right location is a risk as the location might have a lot of residents but most likely will have a lot of competition too, as if I was to put my business “CycleChains” in Wickford high-street then I will have a competitor too already their “Cycle King”. If I was featured on ‘Dragons Den’ and then you win it, you will have a risk as you would have to pay the “Dragons” (Investors) back there money through your turnover at the end of the year, also they’ll own a percentage of your business.
Opportunities that might allow my business to be opened might be to become featured on the news possibly through “Dragons Den”, being on the news might increase popularity, possibly resulting in higher sales: so a bigger turnover being on ‘Dragons Den’ would also give me a boost in money as if I win I would they would invest. Also being on the news might mean that I could expand my business or get requests to pair up with another business. Another opportunity for my business would be to tap into government funds like a grant in doing so this would benefit my business as I’ll have extra money to invest with, without making any losses or massive changes. It would also allow my business to spend money on new investments such as new places to put place my business to expand my business. Another opportunity my business could take upon is having an investor invest in my business, there is my business called “Fleximize” which offers SME businesses (Small or Medium Businesses) up to £500,000. They offer a service to borrow money between £5,000 and £500,000 for 48 months (2 years). Having an investor is a good possibility to have, as the main reason why start-up business fail is due to a lack of cash flow, or the inability to gain access to sufficient funds. So having an investor is good as for my business as it could stop my start-up business from failing. Also they aren’t classified as loaners, so you don’t have to pay back any upfront costs, also there isn’t any deadline. Also they could help my business as Investors are less reluctant than a bank to offer financial support. This could be a beneficial opportunity as having an investor would allow my business to request money to expand my business and then pay them in a couple years’ time. Another opportunity that my business could take advantage of is the decrease in visits-in store and an increase in online shops being visited, I could create an online shop and still run and keep and in store shop. This means that I could potentially get twice the amount of an annual turnover and broaden my range as a national and possibly an international business too.
Trends that I could take upon is the boost in Cycling in the London Congestion Charge Zone and people wanting to become more fit and healthier. Following this trend I could locate my business in London promoting to be healthier and cycle (currently the amount of people cycling each year is rising by 5% each year) I could take advantage of this by becoming a sponsor of this scheme, possibly boosting popularity.
Another trend that I could take advantage of is the increasing use of online shops, using this trend to my advantage is I could create an online website while keeping my in-store business too. In doing so this could be beneficial to my company as potentially I could acquire twice as much of an annual turnover in doing so, as I will be able to extend the range of my customers nationally and possibly internationally, Also this could boost my popularity against my competitor’s popularity.