Mike Powell/Digital Vision/Getty Images
As a business owner, you don’t operate in a vacuum. Many of your business decisions, from whom you hire to where you locate your offices, affect the social and cultural environment in which you operate. If you expand into other countries, you’ll encounter even more potential cultural and social risks. Knowing the risks in advance can help you alleviate problems so that your business can continue to function smoothly without interference or complications.
Location, Location, Location
You make important decisions based on market research to find the most effective location for your business. That often takes into consideration foot and drive-by traffic, ease of access and target customer base. But other risks also must be taken into consideration. You must address issues such as if the opening of your business will affect the historical heritage of a neighborhood or if the site is an environmental hotbed that could lead to problems. Additionally, consider whether your business is a good fit for the social structure that currently drives the area.
Risks as Real or Imagined
Very often, the risks you face may not always be real, but merely an integral characteristic of an area that ends up creating the perception of conflict, which could affect your business. For example, if you plan to open a big-box store or franchise in a rural area that traditionally relied on small businesses to provide the community’s products and services, you face the risk of non-acceptance in that community. Bad press and poor community relations can result from not taking into account the social fabric of the community where you plan to operate.
Difference in Culture
Moving your business into foreign markets creates an entirely new set of social and cultural risks where talking too much or ignoring local customs can cost you a big business deal. According to the Foreign Investment Group, business owners traditionally have left the task of getting to know the locals to their human resources departments and not integrated into their strategic plans. By not addressing and thoroughly understanding the cultures of new markets, you risk alienating customers and losing significant earnings.
Digital Risks on Social Radars
If there aren’t enough cultural and social risks inherent in the physical communities where you operate, you’ll find a plethora of risks in the virtual marketplace. Social media has become so pervasive in society that business owners cannot ignore the risks of entering the digital universe, either by choice or accidentally. You must protect your reputation and your brand as you enter the social business media arena, often with little control over the end results. On top of that, through digital exposure on social media platforms, you give your competitors a wider view into your strategies and movements.
Linda Ray is an award-winning journalist with more than 20 years reporting experience. She's covered business for newspapers and magazines, including the "Greenville News," "Success Magazine" and "American City Business Journals." Ray holds a journalism degree and teaches writing, career development and an FDIC course called "Money Smart."