Jessica Young Eric Yunker Rui Hui. Sales tend to go first. The demand for any type of good usually...

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