jessica young eric yunker rui hui. sales tend to go first. the demand for any type of good usually...
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Next to slip are profits. This is because you are not making any revenue on your merchandise, this is directly associated with your profit. Therefore if your sales go down then your profit will also go down.TRANSCRIPT
Jessica YoungEric YunkerRui Hui
Sales tend to go first.
The demand for any type of good usually begins to decline when there is a recession so, sales do get hurt first in these times.
The only time that sales don’t tend to get hurt is when there is a inelastic demand for the good being sold.
Next to slip are profits. This is because you are not making any
revenue on your merchandise, this is directly associated with your profit.
Therefore if your sales go down then your profit will also go down.
Smaller companies have more of a tendency to go bankrupt. Smaller companies do not have a lot of
capital assets as collateral in order to protect their company in hard times.
Because of this, these small businesses tend to go bankrupt.
From a survey of 165 small businesses, only one in twenty firms said that survival through the recession was threatened.
Only 8% reported serious ramifications.
The majority said that for the most part their has been no real noticeable impacts.
Even though a lot of people think that every business is affected negatively by the recession that is not true.
A large percent of small businesses are actually either not seeing any affect or gaining sales and profit.
Table 2 Business Performance Changes Between Q1, 2008 and Q1, 2009
Value of sales value of sales Profit margins Significantly higher 10.8 6.4 Slightly higher 15.7 14.0 About the same 19.2 27.4 Slightly lower 28.0 28.9 Significantly lower 23.9 20.4 No data 2.3 2.9 N 343 343
We decided to focus on a variety of small businesses in Ada, OH.
We interviewed each of the owners from the following The Bear Cave Reichert’s Keith’s Hardware Carol Slane Florist
Pre recession: Very profitable Not to many competitors in town Steady customers Longer hours
Post recession: Decrease in earnings 5 new restaurants More at random customers Open less hours
“WHAT PROFIT?”
Purchase prices increase
menu prices to increase
Increase restaurant budget
Less business but steady employee wage
CHANGES MADE
Ordering less supplies/stretching
Combining/ monitoring utility bills
Offering a more affordable alternatives
Owner works more hours
Turn off grills earlier
Pre-recession Less competitors Offering employee overtime during high peak
times Offer vast varieties of name brands
Post-recession People traveling to larger department stores for
greater discounts Less variety of supplies Harder to get suppliers
BUSINESS DIFFERENCES
Less customers No extra purchases Fewer supply
replenishes Offer less employee
hours Less traffic in store
CHANGES MADE
Order less inventory Provide more off-
brand supplies/apparel
Cutting advertising expenses
Watching labor hours Following budget
closer
Pre recession: Very profitable Not to many competitors in town Less stress
Post recession: Less local orders Seeing more competition Change in operations
STORE SUFFERING
People use more discretions with money
Loss of jobs in customers
CHANGES MADE
Promote quality Order less hard goods Making prices as
affordable as possible More internet track Installed heater
timers Re-insulated to save
energy
Pre-recession No competitors Flexible hours Great variety
Post-recession People purchasing more supplies More do it yourself customers Earnings increase
BUSINESS
More people invest in their homes so increase in consumer spending
No effect on employee hours
Loyal suppliers/customers
CHANGES MADE
Sign sensor No cutbacks
The first casualty during any recession is usually sales. Once sales are down, then it usually isn’t long before profits could follow the southward trend.
Also impacted by the recession is the accounts receivable (AR)
Secondary aspects of the goods and services produced by the recession-impacted business may also suffer.
As firms impacted by the recession spend less money on advertising and marketing, big advertising agencies which bill millions of dollars per year will feel the squeeze.
Thank You