In these tough economic times, entrepreneurs everywhere are looking to increase their business presence and diversify into other markets. Many have started out as home-based business owners and have later taken advantage of opportunities like becoming a consultant or venture capitalist. Others have become successful entrepreneurs in their own right through acquisitions, mergers, and joint ventures. Home business success stories can be an indicator of the health of the American economy.
So how do small businesses survive periods of economic instability? Many consider business to be a risk/reward investment. Many entrepreneurs fail in their business ventures because they lack a clear idea of how to analyze market behavior and forecasts. Others fail because they are ignorant of basic economics.
Is today’s economy similar to previous recessions experienced in the past? Small business news publications frequently report on business closures, bankruptcies, and layoffs. During times of financial crisis, media coverage tends to focus more on negative news stories. As a result, many entrepreneurs who are suffering through a financial crisis fail to properly implement preventative measures.
Is the current state of the American economy comparable to previous recessions? The answer is no. Business cycles tend to last about seven years. Since recessions last about seven years, the current economic crisis could easily last twice that long. That is why an accurate forecast of what the economy will look like in the next two to four months is absolutely essential for a small business investor.
What indicators should a business owner to look for in a recession? One indicator is the number of closings of small businesses. In a recent article in The Business Report, Dr. Andrew Stellman and Jennifer Van Zeeland mentioned that in the last thirty days alone, there were eighteen closures of small businesses. This comes in contrast to just twenty closings in the fourth quarter of 2020. This indicates that although business is slowing down, there is hope for many small businesses that are on the verge of collapse.
Another important indicator to keep track of is CEO hiring. The number of high-profile CEOs being appointed by President Bush has caused consternation amongst small business owners. In fact, during a recent edition of The Business Report, Andrew Stellman and Jennifer Van Zeeland made statements attributing the current crisis to a lack of business opportunities for entrepreneurs. Although the two stated that the lack of high profile CEOs was not directly related to the current crisis, it certainly indicated that it may become one in the near future.
Can business be expected to weather a pandemic? Yes. Just as small businesses in the past have successfully overcome small outbreaks of the swine flu and other virus attacks, they can do the same with a potential pandemic. Small business will need to implement a preparedness plan in the event that a new pandemic emerges.
Is this a good time to make business plans? At this point in the economic cycle, the answer would seem to be yes. However, no one can predict what the future might hold for the economy. So, if you are an entrepreneur and are having second thoughts about starting your own business, wait until the worst is over. As the economy makes a recover, many businesses will thrive. Meanwhile, those that have suffered losses will also thrive.
How does this affect you? If you own a business and are uncertain how the economy will react, you may want to consider starting a business credit card. If you use it properly, businesses can survive even during recessions. In fact, business credit cards are one of the few business assets that can actually grow during a downturn. As a matter of fact, during the recent recession, many small business owners saw their business suffer financial setbacks, but were able to weather the storm due to their business credit cards. Thus, with or without the recession, using a business credit card can allow you to stay afloat during a temporary cash-flow crisis.
It is important to note that there are risks involved with investing in the stock market. You may invest your money in the wrong companies and may even lose it. On the other hand, many small business owners have made great profits from the stock market in the past. In either case, small business owners understand the importance of a sound business plan.
In summary, the United States has a unique opportunity to help small businesses grow and flourish. Unfortunately, this opportunity does not come around very often. For this reason, most business owners have to do all they can to make sure that their small businesses are viable and profitable. As a result, many owners have to work long hours at home. Unfortunately, many of these home-based business owners have also been known to neglect their physical health. Regardless, of where you work, working from home can be extremely demanding on your physical health and wellbeing if you do not follow safe work/home living habits.