5 Economic Indicators That Affect Business Success

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5 Economic Indicators That Affect Business Success

February 24, 2021  |  georgev Categories: BlogGlobal Expansion

All businesses are there to make profit. However, whether they thrive, or cease depends on external circumstances as much as internal. Although such factors as economy, politics, legislation and technology are often beyond your control, they have a major influence on your company’s prosperity and should not be neglected when preparing your business development strategy.

Let’s have a closer look at the main economic factors that affect business success.

1. Consumer confidence.

Consumer confidence measures the overall consumer optimism about the state of economy. Confident consumers tend to be more willing to spend money rather than consumers with low confidence. Which means businesses are more likely to prosper.

2. Economic growth and development.

Economic development is probably the most important indicator affecting business success. As a business needs to cater for the demands of an economic environment potent society. It indicates the amount of money that is being invested into channels of long-term upgradation and the finances of the people living in the society at large in a particular country is decreed by the economic growth of a country.

3.  Inflation

Inflation normally occurs when supply of money is larger than the availability of goods and services. And is followed by increased costs of raw materials, production and utilities. In order to sustain business, the prices of goods have to increase. As a consequence, inflation can reduce the purchasing power of consumers, unless employers increase wages based on the level of inflation.

4. Interest rates

The last but not the least important factor is interest rates. They represent the amount that a lender charges an individual or business to borrow money. Many small and medium businesses rely on loans from banks and other financial institutions as a source of financing. High interest rates result in higher total company expenses.

5.  Unemployment 

Another crucial aspect of the economy that affects business operations, is employment. Again, it has direct impact on the purchasing power of individuals. When unemployment is low, consumer spending tends to be high because most people have income to spend. Which is good for businesses and helps drive growth.

Concluding thought…

The above indicators are permanent and universal. They will influence any business, small or large, local or international in any given place and time no matter what. Normally, these indicators, dominated by domestic and international politics, are pretty steady and predictable for entrepreneurs who do their “homework” on a regular basis.

However, 2020 has reminded us that we should never underestimate the power of global events that may occur unexpectedly. While it is way too early to discuss what impact exactly the two major shake-ups will have on our world, it is safe to say that Brexit and Covid-19 pandemic has completely reshaped global business scene for good.

Of course, it is impossible to forecast a global breakout of a disease. Just as nobody would have thought that common dissatisfaction with European immigration laws and some trading rules will turn into a full-scale alliance collapse resulting in Brexit.

Nonetheless, there are certain ways to “fortify” your enterprise so that it is ready to face more challenges. One of them is utilizing PEO and EOR services helping to keep your business agile, flexible and reactive. As well as eliminate some risks caused by economic and political uncertainty.

Are you looking to take your business to the next level? Contact Bradford Jacobs today to discover how our corporate solutions can assist you in conquering new heights.