5 external factors that could destroy a business

There are factors in business that we cannot control or predict, and they are sometimes the most deadly. The earnest CEO with a brilliant product and a great set of supporting staff, perhaps recruited through exec-appointments.com should succeed, but sometimes external factors rebel and conspire. Here are five outside forces that can conspire to derail even the smoothest train.

Better competitors

Both an external issue and an internal one, as its also known as taking your eye off the ball. An obvious example of this is the newspaper industry, which completely failed to foresee the effect that the internet would have on the way we consume news, and soldiered on with a hopelessly old-fashioned approach.

Ad revenues are continuing to fall and last month Trinity Mirror closed seven regional newspapers in a heartbeat – the latest in a run of gloom – as reported in Hold the Front Page.

Meanwhile, Huffington Post, Twitter, Buzzfeed, and a multitude of other young companies grabbed news by the throat and converted it into a 21st century delivery.

A change in customer habits

Does anyone still use a pager? Does anyone still buy CDs? Or books? The answer to the latter two examples is yes, but whether this will still be the case in five or ten years’ time is open to debate. Technology, in particular, is changing the way we shop, consume and basically live, through SMS marketing and geotagging, wearable technology and social media, on-demand media and the cloud, and much more.

The company that ignores the changes in their market will soon be buried as an anachronism, such as Kodak, Woolworths and Comet. It’s sad, but it’s also progress.

Overdependence on single customer or a few large customers

The obvious example is Phones 4u, the multi million pound company that seemingly folded overnight in September. In reality the writing was on the screen throughout 2014 as Three, O2 and then Vodafone all withdrew their support, leaving just EE as the last mast standing. Once they pulled out the company fell into administration; 2,400 people lost their jobs and the taxpayer will foot a bill of £78m, according to the Telegraph.

It sounds great to have one large customer paying you for your services, but betting everything on their sales could fold spectacularly if they find a better deal elsewhere. Don’t forget your other clients – they may ride to your rescue one day.

Physical infrastructure

It’s a harsh fact of business that little stays the same forever, and that includes the state of bricks and mortar. Speak to SMEs across the world and one of their usual complaints is the cost of business rates and rent, slow broadband, the condition of the roads and pavement near their premises, and a lack of joined up thinking from businesses and local authorities.

If just one of these aspects changes for the worse then the short and long term effects can be catastrophic. Even a change in nearby road speed or parking regulations near a small business can cripple takings. And if the local council approves it there’s nothing you can do.

Bad luck

Weather, crime, and natural disasters are all examples of external factors that cannot be helped. Illness and accidental death might be avoided, but they still happen.

American small companies in particular are forever susceptible to forest fires, tornadoes and freezing temperatures, and it is not just the physical effects of the weather but also the after effects – a drop in sales and increased heating and insurance bills, combined with changed cash flow patterns, could ruin a company. It might not even be your company that is initially hurt, but one of your key suppliers.

The only way to really prepare for some of these disasters is to install added security, establish a second office, and look after oneself.


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