Economics and Small business

March 9, 2011 at 11:35 am Leave a comment

The term economics refers to the study of the movement of money at the population level.  Economics looks at the aggregate of all the grocery shopping (for instance) by everyone and makes inferences and predictions based on how much, how often or how little we spend as a group.

What does that have to do with our small businesses?

There are 2 things that concern us about the way money moves.  One is the availability of credit; the other is the behavior of consumers.

Availability of Credit

Governments use interest rates to control inflation.  As interest rates go up, money becomes more expensive to borrow and we tend to borrow less, expand or invest in our business less and take less risk.

When the economic climate becomes unstable, banks don’t like to take as much risk and they tighten up their loan requirements.

Both of these affect our access to and supply of money.

 

The way people behave about money

When the economic climate becomes unstable people buy less – people being our customers.  People, business and governments start taking longer to pay.  This leaves our businesses starved for cash meaning we are less likely to spend and so the system cycles ever downward.

These times also offer great opportunities.  Businesses that focus on helping people save money or make more money will do well.  When your competitors are hunkering down, you can step up to get noticed more easily.

How can you help your customers save money or make more money?

What can you do to outshine the others in your industry?

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Entry filed under: 1. Know Where You Are Going. Tags: , , , , , .

February Reading Other Numbers of Business

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The Three Success Factors

I have worked closely with 100’s of business owners and I have seen too many struggle. I have seen what works and what doesn't.

It takes 3 things to succeed:
1. Hard work - and I know you do that already.
2. Knowledge - domain knowledge: you've got that and continue to learn; and business knowledge: this is where everyone focuses and it's easy to find
3. Mindset - This is the killer app. This is what makes or breaks small business owners.

We work on Mindset here at the Business Owners Success Club: how you think about yourself and your business.

When you focus on a business that gives you what you need to live a Good Life and gives others what they need to solve a problem, everything else falls into place and you have a successful business.

Using that as a framework we work on one aspect of business every month. February is "Your Place in Your Community" month.

In March we will open the doors to our online community. Stay Tuned.

Sign up here to play along.

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