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Smart Ways to Predict the Performance of Your Business

Posted: May 26, 2017 at 9:48 am   /   by   /   comments (0)

As a business owner wouldn’t it be lovely to have a crystal ball that would let you know when your business would be up and when it would be down? You could prepare for those downtimes and maximize the good ones, while also creating the ideal strategic plans.

Unfortunately, that’s not going to happen, but there are some ways you can predict the potential performance of your business based on the larger economy, some of which are highlighted below.

Look at the Markets

You may feel that if you have a small business it’s useless to follow the markets when it comes to predicting events in your own business, but that’s not the case. Looking at financial charts and the performance of not just individual stocks, but sectors can be valuable to help you see what’s going on in your industry and the economy in general.

Of course, not everything impacting the market is going to impact your business, but you can start to gauge how your general sector is moving and performing, and potentially catch trends before they directly affect your business.

Looking at markets can also help you discern specific indicators that might be relevant to you such as unemployment and consumer sentiment.

If you’re a small business and you see something starting to brew in your industry, it may eventually trickle down to you.

Banking

The wider banking market can be significantly tied to the performance of your business. Banks will change their lending habits based on certain indicators they see happening, and that can determine how available capital will be to you.

By gauging what’s going on with banks, you can also start to see how they’ll view things like risk and liquidity, which can help you know when it’s time to focus on growth and putting new investment into your business, and when it’s time to hold steady for a while.

Inflation 

Inflation is an important and valuable way to start forecasting the future of your business. With inflation, your business expenses will rise, and costs associated with running your business will be higher.

That will lead you to likely raise your prices as a result in order to stay profitable, and inflation can also lead to lower levels of purchasing power on the part of customers unless wages are keeping pace. These are some of the reasons keeping an eye on inflation is important as a business owner.

Global Markets

If you’re an entrepreneur who has any interaction with customers, employees or even vendors outside of the U.S. you’ll need to look at world market trends as well. For example, if you have customers in Europe, you may need to look at the projected growth in that region.

If you have suppliers in a country where growth is strong, prices may go up which could lead you to increase prices, and that could impact profitability.

All of the above are very broad things to keep an eye on as an entrepreneur. As business owners, particularly small business owners we may feel like we’re not affected by these conditions, but in reality, we are, and by being ahead of them you can better predict your own performance.

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