In economics, macroeconomics encompasses societal perspective on the resource allocation. Microeconomics involves the factors of resources availability and usage that impact the individuals and businesses as well.
As a company operator, you must have to understanding the core microeconomic factors that are affecting your business help you in short-term planning and preparation, as well as long-term business strategy development.
Some of the following are micro environmental factors that can affect your business:
Customers:
Customers pay the most direct microeconomic impact on a business. The simple fact is that you can’t successfully operate a for-profit company without attracting the targeted customers. Knowing your ideal customer types and developing and presenting effective marketing campaigns are useful integrals to building a customer base and generating revenue streams.
Employees:
Your workers produce, sell or service the goods and service that indirectly drive your business. The availability of qualified, motivated employees for your business type is a vital to get the economic success. If you operate a highly technical business, for instance, you might have to pay more in salary to attract a limited number of available, specialized workers.
Distribution Channels and Suppliers:
Sourcing goods used in production or resale and distributing your inventory to customers are too important as well. Manufacturers rely on materials, suppliers and resale companies rely on manufacturers or wholesalers to transport the goods. To operate profitably, you must need to get good values on products and supplies and, in turn, offer good value to your customers with their accessible solutions.
Competitors:
The level of competition also impacts your economic livelihood. In theory, more competitors mean your share of dollars’ customers spend diminishes. However, a large number of competitors in an industry usually signifies lots of demand for the products or services provided. If an industry lacks competition, you might not find enough demand to succeed in the long run.
Investors:
Shareholders and investors may help fund your company at start-up or as you look to grow. Without funds to build and expand, you likely can’t operate a business. You could look to creditors, but you have to repay loans with interest. By taking on investors, you share the risks of operating and often gain support and expertise. You do give up some control, though.
Media and the General Public:
Your local community and media also affect your ongoing business image. Communities often support companies that provide jobs, pay taxes and operate with social and environmental responsibility. If you don’t do these things, you may run into negative public backlash. Local media often help your story proliferate, for better or worse.
Read More:-6 Actionable Tips to Making Your Small Business Look Like a Billion-Dollar Corporation