International relations, a discipline that focuses and attempts to explain the interactions of both the state and non-state political actors and is becoming ever more important as the world continues to become more interconnected, affect the everyday lives of any level of the society in ways you might not even realize. The impacts of the tethers between countries do not exempt anyone, whether individuals, families, and/or organizations – such as small Businesses that work to thrive in them.
It is very important to note that the area most susceptible to change due to international relations and other major causes such as national politics – is the business market. It is the heart of the business where trading happens and any change in the political policies (whether big or small) can potentially affect the market significantly.
And with the major trends in policies affecting the legal framework within which small businesses operate, along with the competition against the bigger fishes in the sea – what areas do international relations affect and what are the risks?
While economic trends might just be some indicators that show how a region or country is doing financially, it can affect businesses particularly the small ones. When different political parties or individuals enact different policies based on their own economic ideologies, impacts on taxes and interest rates are inevitable.
Taxes levied on individuals and businesses can leave the producers and the consumers with either more or less money to spend in the market. On the other hand, changes in the interest rates (particularly for small business loans) can be affected by the government’s ability to control economic conditions.
One article suggests that the success of a small business is not only a matter of economic security but national security as well. The political people and parties in power have a direct influence over the relationships of nations and can do much to heighten or calm security fears despite emerging issues (i.e., Japan and China vowing to keep up ties despite the 1937 Nanking massacre). A nation at peace can encourage consumers to spend more and invite investors to engage in long-term assets such as businesses and homes.
Labor laws are one of the most important things all business owners should understand as it can potentially damage or benefit one’s business. One way to keep an eye on the changes in Labor Laws is by being updated with the latest political trends. Political leaders and candidates are often vocal about their stances about minimum wages, taxes, and terms of employment. Any change in the labor laws means changes for business expenses, more significantly for the small ones as it can cut directly into its profitability.
Another economic indicator that measures overall consumer optimism about a country’s state of the economy is consumer/investor confidence. Confident consumers/investors tend to be more willing to purchase and spend money on anything as compared to the ones with low confidence.
The more confident consumers/investors there are, the more likely a business to prosper and take on new opportunities to enter the market. However, if not, companies are most likely to cut costs to maintain profits.
Small businesses are the backbones of the society’s economy. They are responsible for the greater than half of the sales and jobs in almost all countries in the world. And therefore, if they are not thriving, nations will suffer. However, keeping an eye on the impacts of International Relations on the different areas of small businesses and maintaining good international relationships is critically important to keep the balance between its threats and benefits.