Recession Cycle
What Goes Up Must Come Down

What Is The Recession Cycle?

A cycle is an interval where a recurring sequence of events occurs. When the economy of a country is strong the unemployment rate is down. This means that most people have jobs and are therefore making money.

People with money will spend their money on necessities and luxury items. This means that the demand for consumer goods and services is high. When the demand gets high enough prices will be driven higher. This increase in prices leads to a necessary increase in salaries to keep up with rising costs of living. This increase in salaries leads to a higher production costs which in turn translate into higher prices.

The Recession Cycle / Goods and Services

When prices get too high consumers usually decide to buy less goods and services. This means that demand for commodities and services goes down. If demand is down companies then need to reduce production. This situation then leads to a layoff of the companies workers because they don’t need to produce as much.

Decreasing demand worsens the situation because prices fall further. This means that the economy is now in a recession.  When the recession causes a lot of small or inefficient businesses to close and go bankrupt. Eventually the bankruptcies will cause a decrease in the supplies of goods and services available. At this point demand may slowly begin to recover.

How long will a recession last? Recessions have no definite time limits. They can last for six months or several years. A recession that lasts longer and is more severe is called a depression.

The Recession Cycle / What Can the Small Business Owner Do During Recessions?

 The reputation of your establishment can insulate you from the worst effects of a recession. The word of mouth that spreads from your satisfied customers will make old customers come back and new ones want to try what it is that makes your business very attractive to your patrons.

As the owner of a business establishment you want people to be talking about what your establishment can offer that will give them their money’s worth. When these conversations take place between your old patrons and potentially new customers you want them to contribute to your good reputation.

The Recession Cycle / Nourish Your Good Reputation

The effect of reputation is undeniable. A good reputation will bring in more business especially during lean times when people want to get the most out of their money. When people hear about you from their trusted friends they will trust the judgments and opinions of their associates and will want to see for themselves what your business can offer them that is better than your competition.

Reviews from experts and other organized bodies will enhance what your customers already know is true about your business. The opinions from these persons or bodies are an invaluable announcement about how well you do business.

The Recession Cycle / Being Proactive

Displaying these reviews in a strategic location in your place of business will invariably be very savvy business tactic. When these reviews are displayed in professionally crafted and artistically designed frames they will have even more impact on new customers entering your place of business. Even old customers will be happy to see that their choice of where to spend their money has been validated.

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