External Microenvironment Definition
The External Microenvironment is the elements or factors within the small business’s immediate area of operation that have a direct and measurable impact on performance and decision-making independence. It refers to all people and organizations that are in direct contact with your small business and influence day to day operations and customer experience. Before you as small business owner can decide on a business strategy, you should analyze your microenvironment in detail.
The most common microeconomic business factors that affect most small business are customers, employees, market intermediaries, suppliers, competitors, media, shareholders and general public.
The most important Microenvironmental Factors are discussed below.
The most important aspect of microenvironment is the customer market since a small business exists only because of its customers. The main task of you as small business owner is to create and sustain customers in order to generate revenue. Customers, therefore, have the greatest direct microeconomic impact on your small business. Your marketing plan should be directed at attracting and keeping customers and providing excellent customer service. Read blog Market Research for Small Businesses
Essential Marketing Intermediaries
Marketing intermediaries refers to retailers, wholesalers, distributors, agents, marketing services agencies and financial intermediaries. They help your small business to promote, sell, finance and distribute your products to final buyers. Marketing intermediaries establish a communication link with your market; take ownership of your product/service; help you search for prospective buyers; and give you valuable customer feedback. In addition, they can help lowering your distribution costs.
Reliable suppliers are very important when sourcing goods, raw materials or components needed for production or for resale. The actions and behaviors of suppliers can negatively affect sales due to delayed production, not meeting customer deadlines or poor product quality. Having a strong and close relationship with your suppliers can help as small business owner in getting the edge over your competition.
Availability of Shareholders and Investors
Shareholders and investors help fund your small business when starting-up or as you grow. Although you are giving up some control by taking on investors, you do share the risks of operating a business. In addition, you often gain valuable expertise and they can help you to be successful over the long-term.
Level of Competition
Competitors are also a main factor in your microenvironment and include companies that directly or indirectly compete with your products or services, within your target market. The level of competition can directly impact your bottom-line. Differentiation is key and you should offer products or services that are different or better than your competitors. You can also differentiate your small business based on being local, exceptional customer service or other considerations important for your target market. Read blog – Market Research for Small Businesses
The availability and hiring of right-fit employees are one of the main factors when it comes to small business growth and the future success. You need qualified and motivated employees to produce and sell your products and services. Without an effective core team, it is impossible to build your brand and develop a unique customer experience! When hiring new employees, you also should consider how they will fit into and contribute to your small business culture. Also read Small Business Human Resources Success
Small business owners should know the ways which they can reach their target customers, create a positive image and market their brand. The media channels available to them are television, print media, radio and internet (including social media). Particularly, social media platforms are a cost-effective way to connect with your customers, increase brand awareness and boost sales. Daily billions of people use social media such as using LinkedIn, Facebook, YouTube, Twitter, Instagram, etc. Positive local media (magazines, newspapers, radio station, etc.) attention is important to small businesses and it is beneficial to build good relationships with them.
Relationships General Public
Your local community affects your ongoing small business image. Communities often support small businesses that provide excellent products/services, have good customer relations, offer jobs, pay taxes and operate socially and environmentally responsible. Although everyone in the community is not a potential customer, it is important that they have a good perception of you and your business. The general public in your community can help you reaching your goals or prevent you achieving them. Interact and build relationships with neighborhood residents, social and business groups, environmentalists, consumer protection activists and others in your area.