Transcript Economics for Small Businesses

Economics for Small Businesses
• Importance of Supply & Demand
– What affects demand?
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Income
Tastes & preferences
Number of buyers
Price of complements & substitutes
Expectations of the future
Monopolistic Competition
• Most businesses operate in this economic
environment
– Sell homogenous products/services
– Find a competitive advantage to “separate”
from other like businesses
• Affect perceptions
Economic Indicators
• Indicators help to forecast future & assist
in making business decisions
• Can be industry specific
– New home starts -> construction industry
• Can be “broad”
– Personal income -> help most industries
Economic Indicators
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Personal Income
Gross Domestic Product (GDP)
Consumer Confidence
Inventory
Survey of Purchasing Managers (SPM)
Unemployment Rate
Inflation
Interest Rates
Elasticities
• Price
– If price changes, how is quantity sold affected & how
does this affect Total Revenue
– Inelastic vs. elastic
• Income
– If income changes, how is quantity sold affected
– Normal vs. inferior good
• Cross
– If price of substitute or complement changes, how in
quantity sold affected
Small Business Banking
• Business checking account
– High fees, high minimum balances
– Shop around
– Commercial banks, savings banks & credit
unions
• Line of Credit
– Secured by investment (Certificate of Deposit)
– Secured by business asset
Banking
• Money Market Deposit Account (MMDA)
– Savings account with checking privileges
• Escrow Accounts
– Tax payments
• Sales tax
• Employee withholdings
• Employer share of FICA & MQFE
– Deposits
Credit Card
• For business use
– Difficult to obtain
– May need collateral
• For customer use
– Pay percentage of sales to bank
– Fees
• Set-up
• Equipment
• Monthly
FYI – Job Projections (NYS
Department of Labor (5 yrs)
• Business
– Accountants
– Auditors
– Financial Managers
– Public Relations
• Investments
– Personal Financial Advisors
– Stockbrokers
• Social Workers
Job Projections
• Computer
– Computer & information system manager
– Software engineer
– Computer support specialist
– Computer system analyst
– Network administrator
• Law
– Lawyers
– paralegal
Job Projections
• Education
– K-5
– 6-8
– 9-12
– Special Ed
– Science
– Math
• Sales
Job Projections
• Health
– Nurses aides
– Nurses
– Medical assistants
– Home health aid
– Medical billing
• Eating establishments
– Food prep
– servers
Job Projections
• Services
– Maids
– Landscapers
– Child care
– Auto service tech
– Electrician
– Retail sales
– Construction laborers
– Call center/client service