Every industry is shaped by a range of factors that affect how customers behave and businesses operate. As you consider industry factors and trends, pay special attention to those you think present special opportunities or challenges for your business.
Demographic factors and trends
Demographic factors and trends are basic characteristics your customers tend to have in common, like:
- Age levels
- Income brackets
For instance, let's say you provide home delivery of hot meals to the elderly. If the number of elderly people in the general population is growing rapidly, it's an excellent sign for your business.
On the other hand, if the number of elderly people is falling, you might consider targeting other types of customers.
Take a look at the Statistics Canada website; it’s an excellent source of demographic information.
Social factors and trends
These are fads or shifts in popular opinion. For example, if you sell desktop calendars when electronic business organizers and calendar apps are trendy. This is an important social factor to take into account.
Economic factors and trends
Economic factors and trends indicate the state of the economy, on both a local and national level. Some questions you might ask include:
- Is the national economy booming?
- Is your community suffering through a recession (according to your Chamber of Commerce or the local press)?
- Does your industry tend to cycle between booms and busts, rising and falling with certain economic conditions?
If you're a mechanic, for example, a national economic downturn might be great for business because customers may prefer to have their old cars repaired rather than buy new ones. However, low interest rates could lead potential customers to borrow money and buy new cars.
Technological factors and trends
Is technology affecting your industry? For instance, how is the internet changing who you compete with? How is it changing the way customers research their purchases?
The same processes might have characterized your industry for years, displaying a low rate of technological change. Are your suppliers beginning to automate their processes?
Trade publications and technology-focused magazines are great sources of information about how technological factors and trends are affecting your industry.
Regulatory factors and trends
What roles do the government and other rule-making bodies play in your industry? Rules about how businesses have to operate often means that not everyone who wants to be your competitor can be.
For instance, chiropractors must earn a degree from an accredited chiropractic college, spend several years training, and finally pass a licensing exam before they can practice.
Patents and copyrights can limit the amount of direct competition you face. Trade associations for your industry are a great place to start when researching regulatory factors and trends.
Environmental factors and trends
Many industries have a unique relationship to the environment. Some are seasonal, like patio furniture retailers that do most of their business in the spring and summer. Others, like farmers or tourism businesses, can be especially dependent on the right weather conditions.
And some businesses, from allergists to trucking companies, work with potentially hazardous materials that require special care to administer and dispose of. These factors can have a significant impact on a business’ costs.
What’s your industry's relationship to the environment? Are there any trends, like a call for environmentally friendly products that may influence the way your business operates?
What factors and trends are affecting your industry? Consider the implications for your business.
Before you take action on any of the information above, we recommend consulting with a qualified business advisor that understands your unique needs and situation for your specific business and/or personal plans.