As people work towards investing in small business, it is imperative to understand the dynamics that influence the success or failure of business ventures. The failure to understand how business environment influences enterprises may limit the success of an entrepreneur and vice versa. In abroad spectrum, business environment refers to both the internal and external factors that influence the operations of any business entity. The following are the elements that influence small businesses; political factors, economic factors, technological aspects, social factors, competition and legal factors.
It is worth acknowledging that politics of the day determine how business operate in that when political tensions in a given society are given a chance, the business environment is unfavourable and business ventures end-up failing. Political factors also include the political decisions that are made by leaders that in influence how business operates in regards to taxation, security and the availability of capital. The capital aspect can be influenced by how government regulates loan interest rates for the sole purpose of making it possible for entrepreneurs to secure cheap and serviceable loans.
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The economic and legal factors play a major role in determining the success or failure of a business entity. For instance, the strength of a currency influences the investment muscles of a given business and therefore when a currency is weak, the investment is weak and vice versa. The economic factors also include the aspects of taxation whereby when the government of the day implements high taxation tariffs, the profit margin is affected hence affecting the success of a business and vice-versa. The freedom to own a business venture and inflation attributes in a given country also affects how people own businesses besides determining their levels of success.
The technological elements include factors such as the ability to implement change and adopt the best and most modern technologies in a bid to conform to the demands of the target customer base. The ability to use modern technology positively influences small businesses. The competitive factors include the ability by business to ensure employee satisfaction, customer service and satisfaction and corporate social responsibility. By considering the above competitive elements, businesses are posed to succeed. Finally, the social environment which includes the aspects of diversity, family set-ups and demographic aspects significantly influences the success of business entities. Finally, there are global factors which influence the success of business both domestically and globally. These factors include; competition from global business and international or regional business agreements and treaties that may positively or negatively influence business activity because it bloats competition.
