Business News – Why Business Bank Accounts Will Continue to Remain Low During a Recession
Small businesses with less than 500 employees make up 48 percent of American private employment and 43.5 percent of GDP, and yet they face an existential threat from an economic quarantine. Since World War II entrepreneurs have had to overcome a barrage of regulations and government red tape to create and maintain small businesses that serve customers at a reasonable price. Today these same entrepreneurs must contend with regulatory overreach and economic instability. This challenge is not new. In fact, it has been faced and solved by entrepreneurial leaders throughout history.
As an entrepreneur you know that the “marketing climate” is always changing. Market conditions are affected by inflation, business cycles, the state of individual industries, public policy and legislation and more. Entrepreneurs must navigate through all of these factors to successfully provide goods and services to customers. The recent economic quarantine the small businesses face is unprecedented and will continue to impact the growth and health of our economy over the long-term.
The current uncertainty is making it nearly impossible for small businesses to survive. Many entrepreneurs are scrambling to establish themselves on solid financial footing while protecting their families and depositing cash into safety nets. The need to secure funding is resulting in many businesses turning to the home business market. Home business owners can operate from their own home or a residential rental and save hundreds of thousands of dollars each year in business overhead costs. Starting a home business gives entrepreneurs flexibility and self-sufficiency.
In today’s uncertain business climate many entrepreneurs are concerned about the health and survival of their businesses in the face of a global pandemic. Is it possible that a pandemic could wipe out small businesses and eliminate millions of people? Is it wise to invest thousands of dollars in business startup capital and prepare for a disastrous situation? The recent Ebola scare has shown that a pandemic can be caused by any type of bacteria, virus, or worm. The recent Small Business Survivalist newsletter published alarming facts on pandemics.
There is no proof or evidence linking any current or past pandemics to a current or recent natural disaster. However, with a pandemic there is always the possibility that the disease could spread between humans. The newscasters recently reported that there is an outbreak of a new strain of a virus that has so far been known to humans. It is unclear at this time if the recent outbreak of swine flu is related to this current strain. However, many small businesses have already implemented contingency plans for a pandemic in order to protect themselves and their companies.
While these small business experts continue reading their daily newspaper, they should remember that there is only a small window of opportunity to make a good investment before the market turns and prices go down. Therefore, they need to focus on the most critical and strategic markets first. The good news is that it will not be difficult to recognize and identify a pandemic, especially if it is centered in a developing country such as Nigeria, China, or the Ukraine. These countries are still developing. If they suffer a severe pandemic, the cost to their economy and the flow of commerce will be extremely high.
As the business news readers continue to read, they should also keep in mind that a business bank account will continue to remain low during an economic recession or near one. The worst that could happen is a small business credit crisis, which would result in a temporary reduction in business credit availability. However, they should also know that during a recession, business expenses will continue to rise. The only question is, how large will the increase be? It is not uncommon to see business costs double or even triple during a recession. Therefore, if a business continues to operate despite increased operating costs, the business bank account will remain strong and profitable.
At this point, you should continue reading. The next part of the article provides some excellent advice on what business owners can do to mitigate the impact of a downturn on business. The first recommendation deals with diversifying the portfolio of assets used for business. Many businesses that have experienced a major downturn have had to reduce their assets in order to stay afloat. In addition, there are business options available to businesses that have cut their spending.