What external factors could affect your business?External risk factors might not be immediate issues, as they could consist of impending changes, which can either be of benefit or detriment to you. Consider the following examples of external influences:
- Various businesses have repositioned to take advantage of the opportunities to reclaim unfair bank charges and payment protection insurance
- A number of companies were formed to prepare Home Information Packs (HIP’s) which were legally required to be provided as part of any home sale from 2007 – a decision that was then scrapped from 2010.
- Many businesses providing Garra Rufa “fish pedicures” failed, after a major media report about the potential dangers of the treatment.
The SWOT analysis is a common feature of most business plans, and often the reader would use the SWOT analysis as an indicator of how well formed the thinking behind the business is.
When preparing a SWOT analysis, remember that the Strengths and Weaknesses are “internal” matters – they relate to your business and are within your control, whereas the Opportunities and Threats are external matters. To help you analyse the threats of a business, you can perform a PEST analysis (read The Startup Coach: Teach Yourself to find out exactly how to do this). A PEST analysis looks at political, economic, social and technological issues that might affect your business, and is a useful way of categorising the various threats that a business might encounter.