Business Planning Economic Considerations
Economic considerations are important when writing a business plan; they can affect the timing of your business launch, your potential revenues and the characteristics of your market. Several economic factors should be analyzed when putting together a business plan, including employment conditions, competition, financials and taxes, and general economic health.
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Employees
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If your business will have employees, consider what they should be paid and whether they need to be part time or full time. Determine what the market is paying people to do the work you need done for your business, and whether those people are in high demand or readily available. The unemployment rate in your area can also affect your ability to hire qualified and experienced individuals to work at your company; a low unemployment rate may make it more difficult to hire the employees you need.
Competitors
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Some industries are intensely competitive and have many companies competing for a finite number of customers. This means that you should consider your competition and how you will convince their customers to switch to your product or service. In less competitive industries, there may be higher capital costs, so assess the competitors you do have to determine how you can succeed alongside them.
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Finances
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Financial projections begin with an assessment of how much funding you need to open your business. Depending on the health of the economy in general, funding may be difficult to find. You need to be able to back up your funding requirements with a description of how the funds will be used and what the lender or investor will receive in exchange for funding your business. In addition, you will need to estimate revenues and expenses for at least the first year of your business. If your business is expected to make a profit during this period, factor in the taxes you will have to pay on your profit.
Economic Health
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Business planning becomes even more important in slow economies, when many businesses struggle to retain customers and keep revenues stable. A business plan should take into account the strength of the economy in general and discuss how the company will manage its growth strategy in changing economic conditions. Excellent budget forecasts are key, as are clear strategic goals. Even if the numbers change significantly in the short term, the business plan should still serve as a guideline to help keep the company on track to reach its objectives.
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