You’re in a lunch meeting with a representative of a company that could potentially be your biggest client. The company is looking to invest millions in a strategic partnership that could set you up for your retirement years. The representative shares that the company plans to capitalize up to 60% of their investment through borrowings:
“How has the inflation rate been trending the last 6 months?”
You have no idea what to say. It feels like your whole life just flashed before your eyes. More like, your retirement plans.
Why would a company entrust millions of dollars of investments to a partner who is not even updated with the inflation rate? If you don’t know the latest trends and developments on a fundamental concept in macroeconomics, what more about key political issues? Peace and order?
You don’t have to be a business dealing with foreign partners to stay updated on business news. Every business owner regardless of industry or scale should make the news a part of his/her daily work schedule.
Reading the latest business news will not take too much time. You can go through various publications and news websites while having a 30-minute coffee break. It will certainly make your coffee break time a more productive one.
What Does Business News Have To Do With My Private Business?
Everything. For the reason that we are living in a globalized economy, what happens in one region is no longer contained in that region. Instead, it has repercussions in other parts of the world.
Do you remember the Greek Referendum of 2011? Greece held a referendum for the people to decide on whether the country should leave the European Union (EU) or stay.
At stake was an economic bailout package from the EU which could help Greece get back on its feet. However, the bailout package had strict and very harsh austerity measures.
The referendum kept the world on pins and needles. If Greece decided to leave the EU, it would effectively default on its debts. The shockwaves would surely be felt throughout Europe, most notably the biggest lender, Germany.
There were also repercussions worldwide particularly for countries such as the United States which negotiated large-scale trade agreements with the EU.
The Greek Referendum of 2011 has its roots in 2008 when the Euro Zone realized Greece would have difficulty paying off its loans to the EU.
Around this time, a number of multinational companies such as Bank of America, Deutsche Bank, JP Morgan, and IBM started to pivot away from Europe and began to set up operations in Asia which did not have large exposure in the EU.
In fact, the problems that plagued the Euro Zone helped transform Asia as the world’s new seat of power. Asia is considered by many as the world’s fastest-growing region.
Case Study: The Bakery Owner
Assuming you own a bakery, how would these global events affect my business?
When there are fewer investments in your country, there will be fewer opportunities available in terms of jobs. With more people entering the unemployed, aggregate demand will be reduced. People will be spending less and saving more.
If your country is import-dependent, fewer investments can lead to a weaker currency. The cost of raw materials will be more expensive and will have an impact on your profit margins.
Petroleum is a major factor of production. It is a significant cost component in the manufacturing and transportation of products. If petroleum prices rise, everything rises. There will be a cascading effect – from the prices of raw materials to rental rates. The problem is worse if you have a weak currency.
So what will you do in the face of rising cost of raw materials, rent, and lower aggregate demand? Should you raise prices right away?
An alternative course of action is to change your business model. You can set up an e-commerce website for your bakery where customers can place their orders. This way, you open up a new stream of revenue for your business.
The cost of maintaining an e-commerce website is not much. Also, you can bake on demand and thus, reduce your inventory. If the volume of sales improves, you can put a temporary freeze on any price increase.
Eventually, you can do a comparative cost analysis. The result of the study will help you decide on whether to keep the brick-and-mortar bakery open or become a 100% online bakery business.
5 Reasons Why Business Owners Need To Be Aware Of Business News
As we just showed you, the effects of developments in other parts of the world will have repercussions on other countries and even on small businesses.
With the Greek Referendum of 2011, the businesses that planned their alternative courses of action in 2008-2009, were able to survive and even thrive in the face of worldwide turmoil.
Don’t assume that because you own a small or medium scale business that such major events will not affect you. When it comes to running a business, you must always be prepared to deal with uncertainties.
Keeping yourself updated on the latest developments around the world – and in your own backyard – is a step in the right direction.
Here are 5 reasons why business owners need to be aware of business news:
1. Improves Your Critical Decision-Making Skills
Contrary to what some people think, getting immersed in business news will not make you paranoid. The root of this thinking comes from the popular perception that news only focuses on negative developments.
To a certain extent, there is some truth to this. Media will tend to focus on negative developments because it attracts more interest. When you read business news, your purpose is to analyze the development and assess how it would affect your own business.
For example, if the government increased the minimum wage, how would it affect your cost of operations? Would it affect your profit margins significantly? How would the increase in the minimum wage rate affect your plans to expand your business? Would you consider outsourcing some tasks to streamline costs?
Reading the business news creates a cycle of “Question and Answer” which will help you come up with courses of action that could protect your business when conditions turn adverse in the future.
The key to finding the right information is to patronize only the most reliable and trustworthy websites. For your daily news, we recommend The Morning Brew for the following reasons:
- The news is delivered straight to the point without fluff or filler content.
- The articles are very well-written and kept brief and concise.
- Reporting is generally unbiased and informative.
- You can find news that fits your business or industry.
We have included the link to The Morning Brew. Get your news hot and fresh off the press every morning – and it is for free!
2. Provides Great Resources For Understanding Your Customer
Because of the Internet, people have more access to information. Your customers can easily be influenced by what they see and read on the Internet. In a few months – even weeks – the demographic that composes your audience may undergo significant changes.
The news also provides content that can help you develop a better understanding of your customer. Some publications and websites frequently share data on changing consumer behavior.
You can come across informative articles that discuss what customers expect from retailers and manufacturers. There are websites that feature opinion pieces from resource people who are attuned with the pulse of the market.
They have the ability to clearly articulate important information that you could use for business planning purposes.
Businesses that are involved in technology would greatly benefit from news about changing demand preferences. What kinds of apps are people looking for? For the reason that sales of PC continue to decline, will you campaign harder for mobile responsive design? What types of hardware for smartphones are in demand?
Creating a buyer’s profile is an important part of running a business. You should always keep track of what your buyers or followers need.
3. Research Your Industry And Competitors
To run a successful business, you must also keep track of your competitors. Find out how they are performing in the industry. Are they introducing new products and services in the market?
Whenever an innovative product or game-changing service is launched, you can be sure that the news media will cover it. In some cases, the company – your competitor – will pay for the press release announcing the groundbreaking innovation.
Keep in mind that your competitors are also doing research on the industry and possibly, on you. Changes in their business development plans are a result of the investments the company has made on its research efforts.
By conducting research on your industry and competitors, you will also know which products or services are no longer in demand. You can uncover which competitors have closed down. From there, you can find out the reasons which contributed to their downfall.
4. Builds Up Your Analytical Mind
In some ways, keeping a daily schedule of reading the business news is like being in university. You learn new things every day. And if you don’t know some of the terms discussed or if the article appears vague, you will be compelled to do research.
When you were studying in the university, learning concepts such as depreciation, trade and budget deficits, Gross Domestic Product, and deregulation seemed pointless.
Now that you are running a business, you have developed a greater appreciation for economics because you can apply them to real-life situations.
You may have to go back to your old college textbooks to refresh your memory on what depreciation is. However, more than just learning its definition, you will clearly understand what depreciation is and how it can impact your business.
5. Great For Networking
Knowledge is power. That saying is 100% accurate and true. When you are updated in business news, you will never attend a business meeting unprepared. An important rule to remember when reading business news is that it is an exercise in comprehension, not memory work.
Do not memorize terms, names, dates, and events. A more effective approach would be to understand the information in the article; analyze it and apply the data to your own business.
“How will this new development in the news affect my business?”
Likewise, you will function more comfortably in a networking event. For sure, some of the people that you will attempt to connect with would like to find out your opinions on current events and the prevailing issues in the industry.
How you articulate your opinions will definitely influence the outcome of your networking efforts. People who are impressed with your knowledge would certainly want to connect with you and potentially do business in the future.
Although reading the news is usually done during break time or before the commencement of work, it can still qualify as part of the productive time. While you may occasionally skim through the funnies, sports, or entertainment, you must always prioritize business news.
For your business news-reading activity to become more productive, you should follow only the most reliable sources of information. As we suggested earlier, The Morning Brew is a great source of news. Sign up for a free subscription and get your fix of business news with your daily dose of caffeine every morning.
Do you have a particular favorite news website? Please feel free to share your recommendations on the comments section below.
And if you enjoyed this article, give us a call and we can help you write amazing and compelling content that will keep your business top-of-mind.