Seven Story Publishing

 Economic crises of any scale spells trouble for the country or region of the world going through it as it disrupts the natural flow of manufacturing and service that everyone has agreed upon. Manufacturing, shipping, distribution, pricing, negotiation, and all other aspects of business and economics contribute to a strong economy and the strength of small businesses represent the strength of local communities and cities within a country and ultimately contribute to the world economy. The origin for all economics begins with manufacturing, which is dictated by demand for specific products and services. Any business in this industry only must focus on gaining clients and making the highest quality products possible as they make their profits from the outset with fewer steps, and most times, fewer complications. 

Small businesses, however, make their profits from the people in their communities and their ability to acquire the product they make their profits from to sell. Small businesses also depend on the efficiency and competency of manufacturers in creating the products as well as the efficiency in the shipping company manufacturers use to distribute their products. Another factor is the abundance of the raw materials themselves as some materials come from the earth and have to be converted while others are made in laboratories and can be mass produced endlessly. And, since small businesses are not self-generating entities, as in they do not manufacture their own products, any sort of economic hiccup or collapse places them in grave danger of being bought out or outright put out of business.  

Small businesses naturally live on the razor’s edge of extinction which makes them the riskiest ventures of any kind. The margin for error is so miniscule it is almost considered a fool’s errand to embark on becoming a successful small businessperson. Even a small recession, in most cases, would put a small business out of business as a small business depends primarily on the financial strength of its community. If a business is able to expand then the risk of extinction lessens; otherwise, small businesses are the equivalent of a low skilled employee living paycheck to paycheck.  

As an entity that lives hand-to-mouth, small businesses cannot afford a crisis of any kind as the owners of the businesses risk financial ruin. Most business owners use the profits not only to maintain their businesses but their lifestyles. Some small businesses specialize in rare products that are scarce in nature and difficult to get a hold of, focusing on high end clientele which presents a different level of risks with its own pros and cons. Most businesses are general in their products and services and depend on the abundance of its customer base and the financial strength of the community, city, and state they reside in.  

Should a state fail to allocate resources properly such as with schools, roads, infrastructure, legislation that favors the growth of business, hospitals, etc., it stands not only to ruin the people but the companies, mom & pop shops, and local markets they depend on to live their daily lives. Small businesses are the backbone of daily existence within any community as they allow people to go about their lives in the most convenient way possible. Everything that happens on the national, international, and global level eventually trickles down to local communities and the businesses that are responsible for a considerable portion of a community’s economic strength. 

Effects of Economic Crisis 

• Small businesses close their doors due to inability to rent their property 

• Small businesses are bought out by larger ones while big businesses expand 

• Larger businesses stand a better chance of adding subsidiary companies to their repertoire to establish conglomerates 

• Quality products are repurposed for mass production which takes away what made the product valuable in the first place 

• Small businesses that depend on government funding or grants (hospitals, clinics, and other medical facilities) run out of medications and prescriptions people depend on to live or function properly 

• Financial and economic strength of communities decrease resulting in a disruption of the flow of currency 

• Small businesses experience decreases in profitability due to shortages in manufacturing plants 

• Delays in distribution begin to occur which lands small businesses in dire straits as every day incurs more cost than profit 

• Manufacturing plants cannot make their profit due to shortage of materials or restricted access to parts of the world which disrupts distribution 

• Communities start to be more conservative, especially within a service-based economy which cripples small businesses 

• Hard economic times lead to indecisiveness in customer purchasing decisions leading to a loss in time and profit 

• Some small, essential businesses may close their doors, making the lives of those that depend on that business more difficult 

• Increase in crime which places small business owners in danger of incurring damages they cannot afford to fix 

• Small business owners begin to have trouble finding employees as they are forced to reduce their wages to survive 

• Workload of present employees increases which leads to decreased productivity leading to a less than high quality product or service 

• Customer complaints begin to rise as displeasure with products and economic unrest begins to influence every purchasing decision  

• Certain materials small businesses may use become illegal which prevents them from selling products that contain the ingredient (especially if the product possesses the most profitability) 

• Potential rise in vacant properties which can have a negative effect on the value of a community which restricts its ability to create business and generate profit for the overall economy 

• Decrease in quality customers bringing about economic, financial, and personal issues 

Conclusion 

The effects of global economic crisis can be devastating, especially to small businesses. For an entity that lives hand to mouth, on the razor’s edge of extinction, survival is always at the forefront of every business owner’s mind. It is paramount they make the best decisions possible to maintain and grow the strength of their businesses so the initial venture they risked financial ruin for can bear fruit and be a long lasting and contributing member of society’s infrastructure. 

Small businesses are an essential part of an economy and cannot afford to discontinue for any reason; if small businesses go out of businesses, so do communities; if small businesses go out of businesses, so do states and countries; if small businesses go out of business, so do big businesses.