When you work as a business leader, it is your job to ensure the smooth running of the entire company. However, there are many external factors that can have just as much of an impact, but you have no control over these.
A large majority of these external factors are based in the financial market. While you cannot change these situations, you can learn how to pivot around them so your company continues to thrive. With that said, here are some of the financial factors that can impact your business.
The Economic Calendar
Before you learn about these additional road bumps, it is important to learn where you can learn about these upcoming changes. The economic calendar is a publication that you can use to see any forecasted dates that may change the current economic structure. Sometimes a government’s plans to implement new policies can have an effect on the current economic situation. These changes will be made public fairly early on, which is why it is important to visit TradingView to see what’s coming up on the economic calendar. This information should allow you to make the right adjustments to your business in plenty of time.
Inflation
Inflation is a calculated rate of price increases that occur over a short period of time. Remember watching films or TV shows set in the 1950s when food prices seem unbelievably cheap? It only seems ridiculous to us now because the global economic market has seen so many rises in inflation since this time. There are two main causes of inflation. One happens when workers’ wages are increased. This occurrence means that the public has more money to spend which forces businesses to raise the prices of their goods to meet this expectation. Another cause of inflation is the lack of demand in the market. Since no one is interested in buying goods at the current rate, then businesses are forced to raise their prices in an effort to make ends meet.
As you can see, there is not a lot that the average business leader can do to prevent inflation. All you can do during this unpredictable period is adjust your prices to meet the demand or change man hours to reflect your current income.
Exchange Rates
Exchange rates are the term used to describe how much it costs to convert currency across international markets. The value of an economy’s currency is always in flux. If inflation rates are low then your country’s currency is likely to be strong. This means that more international businesses are likely to want to trade with you because the exchange rates are so low.
That is why it is important for businesses to pay attention to the economy of foreign markets. You don’t want to lose money by trading in the international market if the country you are trading with has a poor exchange rate. The current exchange rate is another reason why you need to pay attention to the depreciation of your country’s currency. If its value falls, then you may want to focus more on local trading rather than expanding into international trade.
Interest Rates
Interest rates are determined by the banking system, and they determine how much extra income you could make on your savings. On the other hand, high-interest rates could also affect how much you have to pay back in exchange for taking out a loan. Interest rates are determined by a country’s economic success. If your currency is doing well then there is more money to pump around the economy. This means that banks have more money to reward customers with a large savings account. However, a country with a poor economy will be forced to lower interest rates. This means that cash flow is likely to be tight, especially for businesses.
When inflation rates are high, it is important that you do not borrow any long-term loans. If interest rates are expected to rise as per the economic calendar, try to consolidate any outstanding debts that you currently have. It is much easier to pay back debt during times of low-interest rates.
Unemployment Rates
Unemployment rates may not seem like something that is crucial to the financial status, but these numbers can directly harm an economy. This is because a lot of people out of work will not be able to afford to put money back into the economy. Therefore, the economy is likely to shrink as a result.
You can predict these types of crashes if you pay attention to current news events. A country that is about to see industry closure or experience heavy strike action is likely to see a rise in unemployment rates. This means that the economy is about to take a hit so you should prepare your business accordingly.
Summary
There is no need to fret about these financial factors. So long as you pay attention to the economic calendar and current economic news items you should be able to get through these struggles affectively.
