What do I need to Know about Small Business Economics?

Are you planning on starting your own business? Regardless of your reasoning behind why you want to start your own business, you must be aware of a variety of factors including small business economics. You also need to remember that running your own business will be exhausting. There will be long nights. But if you are built for the small business game, it can be completely rewarding and provide you with more time to spend doing the things you love.

So what are some of the factors in small business economics that can affect your business?

Depending on the state of the economy when you choose to start your business, your path could be easier or slightly harder. The following small business economic factors can affect your business including:

Interest Rates

• Depending on your business model, interest may affect you more than others. If you are in the business of taking out a lot of loans and paying them back over time, interest rates are something you are going to have to be concerned with. When interest rates are high, that is when banks tend to make a majority of their loan profits. That means when interest rates are lower, banks are making less money on the loans making banks even more cautious about whom they are willing to lend to.
• For example, right now is a really great time to take out a home loan (mortgage) because interest rates are so low.

Unemployment Rates

• There are many factors that affect small business economics when it comes to unemployment rates. When unemployment is high, people tend to be more cautious of spending money. That means if you are a discretionary income business such as an ice cream stand or high-end salon, you will need to be cost conscious during times of high unemployment.

Skills Gaps

• Just like unemployment, skills gaps are a factor in small business economics. When there are high skilled jobs that companies can’t fill, businesses can start to be cautious about how much they are spending because their productivity will be down.
• Think about it this way, when you are a construction company you need people who know how to operate the tools on the job. It is cheaper to hire someone who already knows how to do these things but that is not always an option. So you have to hire and train your new hires to do the job. But that takes time and resources. During this training period, you may have lower productivity because other resources are being used to train the new team member. You may also wait to hire the right person who has the skills. With this option, your productivity may still be lower being down a resource. Finding the balance for your company is important because you don’t want to risk someone being hurt on the job or doing the job incorrectly.
• Skill gaps are very common. When there are jobs that require the pre-knowledge and training, it can be hard to just fill the spot with anyone. As a business, you have to run a cost-benefit analysis to see what option will pay off the most for you.

So why do you need need to be aware of small business economics?

Whether your company is being affected by interest or unemployment rates or even general skills gaps, there are still options out there to continue to grow your business. During tough economic times, it can be harder to secure a traditional loan forcing businesses to look elsewhere.

Regardless of what is happening to the rest of the world, we are here to be your stable source of funding. A merchant cash advance won’t change as the economy adjusts. We are here to be reliable for you. We never want the economy to affect your ability to grow your business. Why not give us a call today to have all your questions answered about what a merchant cash advance can do for you. Don’t let small business economics stop you from achieving your dream!

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