External Factors: External factors are usually outside the company's control. The best way for a company to deal with these external changes is to be proactive. A successful company should anticipate these changes rather than hastily react. There are six main external factors that could influence the performance of a small business: political, economic, social, technological, legal and environmental (PESTLE analysis) political. Essentially, political factors include laws and regulations that force a company to take a certain action or prevent it from taking certain actions. Policy changes can have a significant impact on small businesses. The UK's relationships with other countries can close or open important markets. (Government stability also plays an important role. Internationally, a company may encounter additional political factors such as embargoes, tariffs, uncooperative governments, and even wars. EconomicThe economy usually experiences fluctuations with alternating periods of boom and bust. Boom times are beneficial for most businesses, while busts can cause businesses to collapse. Increased demand and low interest rates generally encourage businesses to take more risks and significantly expand the performance of a small business. High interest rates push up currency values, which makes imports cheaper and exports more expensive, thus reducing profit margins. Social These relate to changes in lifestyle, spending patterns and changes general in consumer behavior the population also changes over time. For example, the baby boom generation in... middle of paper... blic awareness of environmental issues. Most of them benefit the environment, but this inevitably has a financial impact on businesses, both large and small. A recent example is the regulation requiring that a specific minimum percentage of all packaging must be recycled. A less glamorous example is the current policy goal of reducing pollution by imposing high taxes on road fuel; This may seem environmentally friendly, but with rising fuel prices drivers are naturally looking for the lowest prices. These lower prices are typically found at petrol stations operated by multinational oil companies and large supermarket chains, against which small, independent local repair shops cannot compete. Environmental issues and regulations are unlikely to disappear, so only companies that take a proactive stance and prepare to work with them will ultimately survive.