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As many of you know, the best business models with the largest consumer base, can unexpectedly fail, and it’s not because they have made a mistake internally within the business, it’s because they weren’t aware of the external factors that could affect them. Think back 10 years when you wanted to watch a movie - where would you go? Blockbusters. This is a perfect example of how a successful business, which many considered too much of a necessity to fail, would ultimately die a quick death. The main reason Blockbusters failed isn’t because other companies such as Netflix or Amazon prime came about, it’s because they didn’t follow the technology shift that occurred worldwide. Imagine if Blockbusters invested in Internet Services at the same time as Netflix; do you think people would’ve been drawn to a new, unheard of company or one they have trusted and invested in for such a long time?
The short answer is yes, but this doesn’t represent franchising alone; technology is impacting everyone’s lives more and more, and the majority of us are blissfully unaware. Blockbusters is a chief example of how missing a new technology platform or alteration can be the end of a company; but, do you think this will be the last one to go for that reason - I highly doubt it. New technologies such as driverless automobiles, Smartglass, Internet of Things and courier drones all pose a potential and extremely real threat to existing franchises. How are the Courier Franchises going to adapt if a competitor has a fleet of drones that can deliver the same parcels, but at a fraction of the cost? Or, if drones aren’t the answer, what happens when a competitor has a fleet of autonomous vehicles that can deliver the same parcels without the need for any drivers? The Courier Franchise Industry isn’t the only industry that going to be hit by technology changes but, as you can see, technology is becoming increasingly diverse in its ability to do the same tasks as human, but somewhat more efficiently and potentially cheaper.
Brexit is something that every Briton will be aware of, but does this mean it is going to affect you and your business? Well it all depends on what you do. As with most external factors, some just simply won’t affect anything you do, others however, might make you completely shift how you operate. Brexit will hit some businesses hard; for example, if your franchise is supplied by the international community, the influx of exchange rates will ultimately lower your profit margin. For other businesses however, Brexit may have a positive effect; with lower performance of the Sterling, we are expecting to see an increase in tourism, so for businesses that are influenced by tourism, Brexit may be a welcomed change. Brexit is going to affect a lot of different businesses, as seen above, and this can either be positive or negative so you will need to analyse how it is going to affect your chosen franchise.
Politicians choose the rules that we live by and therefore ultimately dictate the rules that businesses work by, so yes, that influences business and unfortunately sometimes there’s nothing as a business you can do to prevent it. This means that you need to be aware of any upcoming legislation that might affect your business. What happens when you have a lot of workers on minimum wage and they increase the national minimum wage limit? How do you adapt to a tax increase in petrol when you operate a large fleet of vehicles? What happens when laws change on the training required for somebody to take care of children and all your 150+ staff need to be retrained? Now fortunately, these new laws often are welcomed by most as they are intended to improve Britain as a whole, this however, doesn’t necessarily mean it will improve your business. Policy changes don’t happen overnight, so you should have enough time to adapt your business to keep it running and potentially gain in strength where others didn’t adapt quick enough.
All the above examples can be combatted if you are aware of these factors before they are going to happen and if you plan accordingly you can make it a potential strength for your business. These are just a few external factors that could impact your business, so if you haven’t seen something here that’s going to impact yours then keep searching for it, because I can assure you there is something out there that you should be aware of.
This is Start Your New Franchises first blog about External Factors of Franchising, we shall be releasing more as they’re many topics to cover, so if you want to read any future articles then please subscribe below.