Small Business Failure

Paper Summary:

This paper explores the importance of economics to small business owners. The author states that a lack of economic information is one factor that explains the failure of small business. It is further argued that the success of a business depends on supply and demand. The author concludes that a business with knowledge of economics has an advantage over a business that does not support knowledge of economics.

Economics and Small Businesses
Reasons for Small Business Failure
The Importance of Supply and Demand
Applying Economics
Conclusion

From the Paper:

"Economics are also important when assessing a business that one is considering purchasing. The only way to accurately determine the success of the business is to consider the financial information. In addition, it must be noted that the new business owner is more interested in future performance than past performance. Economic information must then be used to assess the financial data. A potential business owner might realize that economic factors led to past failure, but that future economic factors indicate the potential for success. The reverse could also be seen, with reasons uncovered that suggest that the business will fail in the future. The use of economic and financial information allows for a fact-based analysis that will assist in making the right purchase decision."

Sample of Sources Used:

• Dun and Bradstreet Corporation. (1996). Business failure record. New York: Economic Analysis Department.
• Daft, R.L. (1997). Management. Fort Worth, TX: The Dryden Press.
• Perreault, W.D., & McCarthy, E.J. (2000). Essentials of marketing. Boston, MA: McGraw-Hill.
• Siropolis, N. (1994). Small business management. Boston, MA: Houghton Mifflin Company.

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