Key learning outcomes:

  • Learn that the impetus for change in a business may be internal or external forces.
  • Identify the benefits of anticipating and preparing for change.
  • Recognise that changes may be positive or negative, and you may or may not have control over these changes.
  • Acknowledge that responding and adapting to change will ensure greater business success.


Without doubt, the ability to manage change has become not only a sought-after, but also an essential management skill in order to succeed in any business. In today’s business environment, change happens at such a pace that if you are still operating your business today as you were 12 months or so ago, there is a chance that you have not just stood still, but are being left behind.

There are many drivers or reasons for change, and it is important to understand the most common ones that may impact your business. The earlier you can spot the need for change, the more prepared you will be and more effectively you will react to it. The most successful businesses operate with a mindset of evolution and continual improvement, and this enables them to be alert to opportunities for change allowing them to react effectively and more quickly than their competition.

Two of the key things to know about driving forces for change are that they are not all within your control and not all are positive. In this article we will take you through some of the most common driving forces for change in small business and outline how you should deal with them. We will break them into two main categories: external and internal drivers.

External drivers for change

External drivers for change are factors or pressures that occur outside of the business. By their nature we have very little control over the cause, but we do have control over how we react and change. Some of the more common external driving forces for change are set out below.


Significant changes in the global and domestic economy can impact businesses small and large. You just need to think back to the global financial crisis of 2008 to see how widespread the impact can be. It is important as a business owner to react as quickly as you can to any significant economic changes. Be informed about the economy and take some time to think about how any changes might affect your industry and individual business.[wlm_ismember]

Remember, economic change can have a positive or negative impact depending on the industry. For example, when interest rates are lowered or raised, it can be positive for any business that relies on people borrowing money, such as those in the motor or real estate industries. Money becomes cheaper and therefore customers have additional spending power. However, for industries that cater to retirees, such as motor home or caravan sellers, the lower interest rates may mean less income if these people are relying on the interest from their savings and investments to create their income. These customers may therefore have less buying power.


Changes in government can mean change for businesses of all sizes. A new government, be it local, state or federal, can mean amendments to laws and regulations that will impact your business. It is essential to prepare for change prior to the election of a new government. Industry bodies often circulate information that will help, and you should always keep informed through the news or make enquiries with your local government member or council. The faster you can get on board with any new regulations or compliance changes, ensuring that your team are trained and comfortable, the faster you can get back to doing business. Remember, any changes in laws and regulations are going to affect your entire industry; therefore, the businesses that adapt to change quickly will have an advantage over the competition.


The rate of change of technology is incredible, and it may shock you to learn that the first iPhone was only launched in 2007. Regularly assessing how your business can get the most from technology, along with understanding how your customers are using it, are essential to maintaining relevance in a changing environment.

Your business, like most businesses, has probably had a website for many years. With the advent of the smartphone, today more that 50% of people use their phone to conduct internet searches rather than a desktop. This means unless your website is built for mobile devices you are at risk of your customers switching off.


What your competition does is beyond your control, although it can have a significant impact on your business. We do not advocate spending all of your time worrying about the competition; it is not healthy and can stifle your ability to perform and grow. However, it is essential to conduct regular research so you are aware of any major changes in your marketplace. In our article “Competitive Analysis” in this section of the website, we provide you with a detailed step-by-step guide, which will take you through the process.

It is important not to implement change without first conducting thorough research. For example, a business might see that the competition has started opening on Sundays and therefore quickly makes the decision to start trading on Sundays as well. However, with some research they may find that in fact the customers do not see this as an advantage, or that the additional resources required to open on Sunday would severely impact on the profitability of the business, making this a poor business decision. A smart business only makes significant changes after research, planning and careful consideration.

Internal drivers for change

Internal drivers for change come from within your business. They are generally under your control and can therefore be easier to predict and manage. Some of the most common internal driving forces for change are set out below.


Over time, many businesses need to deal with the issue of growth. For example, many small businesses outgrow their original premises as staff numbers increase, or demand for their product or service increases to the extent that expanding into a second location might be appropriate. Growth by its nature is a positive force for change, but the impact and ramifications of that change need to be carefully considered.

Any growth strategy needs to be carefully planned and the risks considered before moving forward. It is wise to update your business plan before implementing any growth strategy. We have a complete guide in this section of the website starting with our “Introduction to Business Planning”.


Evolving the systems and processes within your business can create positive change through increases in efficiency and productivity. Often the need for these changes may be driven by external driving forces, such as advancement in technology or your customers’ needs. Taking the time to understand how your customers are using your products and services and asking them how you might be able to improve them are great ways to identify areas of potential change. Like any change initiative, planning is essential, along with involving and gaining input from those team members who are going to be impacted by the change.


Signs that the culture of your business needs to change are high staff turnover and a high level of absenteeism. When people are not happy at work they try to avoid it, either by calling in sick, taking as many annual leave days as possible or by leaving the business. These are examples of factors that drive the need for internal change. Often a business owner or manager will make the mistake of thinking that if they change the staff, the problem will resolve itself. While there may be the odd occasion where one bad apple is spoiling the barrel, more often than not the issue lies with the leaders of the business and any improvement seen with new staff is short lived.

Any cultural change has to be driven from the top of the business down. We provide you with a number of learning articles in the “Leadership” section of the website that will help you to improve and work on your abilities in this area. Additionally, our article “How to Conduct a Team Planning Day” will help you to build a positive culture within your team.


One of the keys to creating high levels of employee engagement within your team is to create a culture of learning within your business. People by their nature want to learn and improve, and allowing them to do this will help to grow your business over time. Using the need for knowledge as a positive driving force for change in your business can help to create some competitive advantages over time.

Spend time learning from your staff members; find out what they are interested in and what skills and knowledge they are keen to acquire or develop over time. For example, you might find that someone within your business has a passion for graphic design and by supporting them in gaining new knowledge and skills, you are able to bring work in-house that you previously had to outsource.


For many small businesses, financial issues are some of the key drivers of change within the business. They can be positive forces when the business is doing so well that there is a need to expand or change to cope with growing demand, or they can be negative forces when the income is not meeting the level of current expenses and this situation cannot be sustained. The most important thing for any business is to ensure that you are reacting appropriately and swiftly to any financial driving force, otherwise it may ultimately result in the failure of the business. Our advice at Absolute Best is to always consult a professional to advise you on such important matters; for example, seek out a good accountant or financial adviser and make sure you see them regularly to review the progress of your business.


This is by no means an exhaustive list of the driving force for change that you will face as a business owner over the life of your business. The important thing is that you are alert to both the internal and external drivers for change so that you are able to react as quickly and effectively as possible. We have all heard stories of business owners that were too slow to react to the need for change, or refused to change when the market they operated in shifted significantly, only to find that they were left behind. These days, having the ability to change and adapt in business is not a just an asset but an essential skill.[/wlm_ismember]

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