Definition of Business External Environment
The Small Business External Environment can be defined as the events, forces, conditions, and entities surrounding a small business that influence its activities, choices, and decisions. The external factors affect a small business’s abilities to be successful and build relationships with customers.
The external environment of a small business has two components, commonly known as theMacro-Environment and Micro-Environment.
What is the Micro-Environment of a Small Business?
The small business’s micro (external) environment is formed by the individuals and factors within the immediate area of operation that directly influence its business operations and ability to serve customers. There is direct contact between the small business owner and its microenvironment that can affect regular activities instantly. The microenvironmental factors include the customers, suppliers, competitors, marketing intercessors, distribution channels, and the general public. Some changes in microenvironment can be controlled by the small business owner. However, there are always micro-environmental factors that are uncontrollable by the small business owner. More details at Small Business Micro (External) Environment
What is the Macro Environment of a Small Business?
The macro (external) environment is formed by the major external and uncontrollable factors that influence a small business’s decision making and performance. The macroenvironment cannot be controlled by the small business owner and represents the “big picture” that impacts all businesses at the same time. It is dynamic in nature and keeps on changing. The changes in the macro environmental can be threats or opportunities for your small business. Macro-environmental factors include the Political, Economic, Social, Technological, Environmental, and Legal factors (PESTEL factors). More details at Small Business External Macro Environment. Also read blog-post PESTEL/PESTLE Analysis for Small Businesses.