Top 3 Biggest Factors Affecting Small Business

Whenever you decide to start a small business of your own, despite it is small, you still have to find out about the factors affecting small business.

I mean when you really take it seriously, not just one or two-week business. Like how I did with my best large room air purifier.

It often takes several weeks to months to find out about all the things influencing your business. I have been through that time before, hope my experiences can help you somehow.

There are some factors that in your control, some is not. Your jobs are taking control the factors you can and make the factors beyond control affect your business in a positive way.

The factors affecting small business


Growth needs a sufficient cash flow to sustain it. Statistics shows that 7 out of 10 new businesses fail within the first three years, 4 of that don’t have strong financial. At the beginning, it will have a lot of expenses waiting for you. Good finance can help you go through that time. That’s why finance is the first factor affecting small business.

Here is something you can prepare:

  • A strong business plan for capital infusion: Produce a clearly written plan for how you will use the financing to grow profits. Include the type of loan terms you need and build the loan specifics into your projected profitability forecast. Explain your business, how the capital will help it grow and how you will use the capital.
  • Accurate and complete application documentation: In case you don’t have your own capital. You must think about lending money. Most loans require time-consuming paperwork that can be hard to assemble. Work with a banker who can assists you with documentation of your loan and streamlines the process.
  • Professional and credible financial statements: The small business owner often undermines this kind of paper. Your business may be small, but the government still care about you, at least, you must know that you have the responsibility to pay tax. A strong business with poorly documented financial statements can cause a lender to question approval. Most owners do not have financial backgrounds, so it is important to work with your accountant to understand and prepare balance sheets and cash flow statements in advance.

Besides that, you still may have some other financial problems. If you find capital through a bank, it absolutely requires you to have the Collateral (a house, a vehicle or a valuable asset). In the easier way, like you get capital from taking part in the competition or meeting an angel investor, they can require you show the capacity of recovering the capital.

Related posts: The Ultimate Guide to Instagram for eCommerce.


What product or services your business provides is also an important thing. Is it popular, is it suitable with your target markets, or does it catch the upcoming trends?

To get more information about this factor, you need to take a research, go online or take a survey, start with your local community, then you can expand if everything goes well.

So products or services is the second factor affecting small business.

Follow these case studies: Store Pickup Case Studies


This is the factors you can not control, can be opportunities, can be risk. Whatever it is, you must learn about it, even more clearly than the factors above.

New products or service is the opportunities you can get, so here I would like to mention more about the threads you may face:

  • Industry or Technology Risk: You will find hard to lend money if the business you join is very risk in that time. Let say you get enough capital to start the business, it will take a longer time to get back your money. Technology risk even more complex in case you start an online business, a usual option for the entrepreneur.
  • Economic Climate: Interest rate fluctuations and credit availability are realities you must address as part of the business process. It is really important when you find a way to raise money.

In 2018, I don’t think it will have many fluctuations in the economy. Small business does not require a big amount of capital, so I personally think this is a good year for starting a business. But environment is still a factor affecting small business.

In addition, with the ones love starting with online business, it is absolutely not going down yet.

Furthermore, I recommend the small business should start with using the advantage of the internet.