When you run a business, you have a lot of tough decisions to make.
SummaryThe importance of the local economyThe national economy matters tooKnowing where the economy is going helps you make better business decisionsLegal input can clear up the confusionYour business depends on sharp decision-makingShould you hire more people or keep racing with a skeleton crew? Should you expand into this new location or keep your business small? Can you afford to put your money in goods or should you keep it a bit longer?
Nobody has a crystal ball, so making business decisions can be a very stressful thing to do. One thing that can help is to pay attention to what is happening in the economy, both locally and nationally.
If you live in an area where there is general pressure to support small businesses, this can definitely help your small business do well. Doing business in a place with a low cost of living can also help you reduce your business expenses. You won't have to pay someone $100,000 a year to work behind the wheel when the cost of living is low.
Living wages are, by definition, lower when the cost of living is low. In essence, this means the cost of doing business can be kept lower in these areas as well.
It's also important to pay attention to things like foreclosures and bankruptcies in your area. Some regions have a greater concentration of economic problems or have these problems earlier than the rest of the country.
See also:How to grow small businesses
Do you know what the DOW closed yesterday?
Well, no.
It is not every person's responsibility to keep track of everything that happens in business. However, as a person who aspires to succeed, you need to be mindful of the situation, especially if you are making business decisions.
Examining economic trends can give you an idea of where the economy as a whole is heading. Maybe things are still going well in your small town, but foreclosures are on the rise across the country. Chances are it will affect your city too.
There are many different economic indicators you can look at to determine how the economy is doing. There's even a lipstick indicator. When lipstick sales go up, it usually means the economy is down and people are still treating themselves more modestly.
Some of the most common economic indicators of the US economy are:
Consumer Financial Stress When spending declines and debt increases, it's a good indicator that the economy is heading for a slowdown.
Starts- When people build more new homes, the economy can boom.
Bankruptcy- More bankruptcies may mean people are ready to put their debt behind them and move on.
Foreclosures- As with bankruptcies, foreclosures can signal that people are ready to move on and get on the right track. High foreclosure rates and a high number of foreclosures in a specific area can also indicate that the banking system is under stress, as we saw during the foreclosure crisis in 2008.
Imagine that you work in the restaurant industry. You want to open a fancy French restaurant in the hottest neighborhood in town. The rent will be high. Overhead costs will be high. Meals will be expensive.
If the economy is heading up, you have a better chance of making it work. However, if everyone around you sees their house foreclosed and bankrupt, then obviously they wouldn't have any extra money to spend on an expensive meal.
When you have two or more economic indices that seem to contradict each other, you might need a little more information to figure it all out. The Legal Clues track legal intakes across the country and can help clear up any confusion regarding two clues that appear to be at odds with each other.
If foreclosures are up but legal clues show it's old foreclosures coming out at the same time housing starts are up, that's a pretty good indicator that the economy is booming. boom after all.
See also:Changing trends in how families buy homes
Making the best possible decisions for your business means being well informed. Learn more about economic indices from this infographic.
