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Economics for Small Businesses

Economics for Small Businesses. Importance of Supply & Demand What affects demand? Income Tastes & preferences Number of buyers Price of complements & substitutes Expectations of the future. Monopolistic Competition. Most businesses operate in this economic environment

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Economics for Small Businesses

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  1. Economics for Small Businesses • Importance of Supply & Demand • What affects demand? • Income • Tastes & preferences • Number of buyers • Price of complements & substitutes • Expectations of the future

  2. 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

  3. 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

  4. Economic Indicators • Personal Income • Gross Domestic Product (GDP) • Consumer Confidence • Inventory • Survey of Purchasing Managers (SPM) • Unemployment Rate • Inflation • Interest Rates

  5. 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

  6. 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

  7. 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

  8. 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

  9. FYI – Job Projections (NYS Department of Labor (5 yrs) • Business • Accountants • Auditors • Financial Managers • Public Relations • Investments • Personal Financial Advisors • Stockbrokers • Social Workers

  10. Job Projections • Computer • Computer & information system manager • Software engineer • Computer support specialist • Computer system analyst • Network administrator • Law • Lawyers • paralegal

  11. Job Projections • Education • K-5 • 6-8 • 9-12 • Special Ed • Science • Math • Sales

  12. Job Projections • Health • Nurses aides • Nurses • Medical assistants • Home health aid • Medical billing • Eating establishments • Food prep • servers

  13. Job Projections • Services • Maids • Landscapers • Child care • Auto service tech • Electrician • Retail sales • Construction laborers • Call center/client service

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