A Guide to Business

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Phases Of The Business Cycle

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A typical business cycle is probably one of the more understood principles of economics. Unfortunatly, it is also probably one of the least applied principals among small business owners. By understanding the normal ebb and flow of business, you can find extra motivation to carry on and find success where others fail.



Since we know how these cycles run, it should be a simple matter to predict them and ride through them. But so often it turns out that people new to online business will quit at the first sign of adversity.

This guarantees failure in a business.

But there is even a much more sinister result. If a person does not learn how to get past obstacles then success will never be thiers. That goes for online or offline. And it applies to life outside of business as well as within it.

At the beginning you don't anticipate the dip in the cycle. Actually it's usually exciting and fun at first when a new business gets started. There is generally a lot to learn. Excitement and anticipation of results run high. It's easy to dream about where the new venture will lead and picture the fruits of clever labor.

Everything at this point is all profit projection, fame and fortune. This lays the seeds for future failure, as inevitable obstacles will surely arise. On the surface these don't seem fatal. The fading away of the initial excitement usually begins the downward spiral.

At some point after beginning the project a person will settle down into the day to day routine. This is really the danger zone of losing interest which leads to quitting the business. That, of course, leads to business failure.

This is when the daily tasks of web site promotion, support calls, testing, tracking and tweaking can get monotonous. If this is a new venture, then the business is likely not making a profit yet and that also becomes a weight on enthusiasm.

Anticipate this and your liklihood of ultimate success will soar! Realize that you will likely lose money in the first few weeks and months. That's just part of the cycle. It's called investement. Depending on the business, you will be investing money, time or both money and time. These are all precious and that's why it's so hard to keep pushing forward when you don't see immediate results.

Even though this is one of the hardest parts of making it in your business, it will be one of the most rewarding moments. It's rewarding when you can look back from the top of your success and look with pride upon the tough times.

Your plan included the long hard march before reaching the ocean of success.

And this is the reward for the hard work and persistence. By having gone through the hard times and seeing how the cycle works first hand, you have the knowledge ingrained on how to repeat that success as many times as you choose.

Have you ever wondered what separates the super successful from everyone else?

It is this: that the very successful people have gone on when other have quit. They've learned what it takes to succeed by experiencing it. By getting though to the other side they have new confidence that what they're doing works.

Next time it's just a matter of refining the process and trying to improve results.

So as you start your business project, keep in mind this cycle. This applies to network marketing, internet marketing, offline business and online business. Riches are not to be had overnight, but they will come with persistence.

One last interesting tidbit: you know about "overnight successes", right? Well, how much work went in ahead of time before that overnight appeared? There were likely months of behind the scenes work to make success happen in a short period of time.
Phases Of The Business Cycle
In today's global economy, the impact of any macroeconomic event travels at the speed of light. The Federal Reserve sneezes, and boy, the rest of the world catches cold in next to no time. The blood pressure levels of many a CEO mirror the changing patterns in oil prices and stock market indices. This is where the skill in managing the business cycle spells the difference between success and doom, and separates the men from the boys. “Beating the Business Cycle” by Lakshman Achuthan and Anirvan Banerji listed in the Professional and Technical books section provides greater insight.

For an entrepreneur, it is very important to learn this lesson early on, lest he or she is forced to learn it the hard way. Let us discuss some of the common tactics that are used by masters of the art of managing the business cycle.

The first thing to do is anticipate. Many a conglomerate has been caught flat-footed by an “unexpected” recession. Sure, macroeconomic developments in far away continents might seem of no relevance, until you scratch the surface. Businesses are highly interwoven these days, and therefore negative repercussions spread far and wide, quickly. If you don't have an advanced degree in Economics, leave the number crunching to someone who does. Ensure that your business forecasting techniques do take into account such developments.

Managing the business cycle invariably starts with realigning capital expenditure. Having anticipated a downturn, most conservative business heads might cut back on new capital investment. On the other hand, proactive thinkers actually increase capital expenditure prior to a recession, in order to gain a first mover advantage when the economy recovers. Of course, this depends on the business you're in – for example, this tactic is favored by real estate companies. Likewise, the decision to acquire or sell a company must also be timed accordingly. The temptation to buy is strong in good times, but comes at a price. At the micro level, you will also need to manage cash flow differently.

To stock or not to? Inventory management is tough enough as it is, but approaches the complexity of rocket science closer to a recessionary period. Not cutting back production in anticipation of a downturn and therefore being saddled with stagnating inventory is a cardinal sin… but so is being caught unawares by surging demand in times of economic recovery, and having no product to sell! Particularly in the case of businesses that make seasonal products, or even those with a high degree of obsolescence, the inventory decision is make-or-break.

Don't cut advertising. No, that's not a typo error, we mean what we said. The reactive way of managing the business cycle is to freeze promotional activity. Tell yourself repeatedly that advertising is investment, and not expenditure, till you start to believe it. Advertising demand goes down during a slack season, and so do rates – which means, you get more visibility at a lower price.

Reassess your human resource needs – by that we don't necessarily mean downsize. Your employee headcount may well fluctuate in accordance with the business cycle. However, do remember, that during off season, the labor pool is in spate! If you have been struggling with finding the right people, it may be a good time to redouble your efforts during a recession. Not only are you likely to find a wider selection of candidates, you can probably hire them at a lower cost.

While macroeconomic events have a far reaching impact, they can also bring about unexpected opportunities. Managing the business cycle is no mean task, and yet, there is hardly anything that is more critical.
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About Author
Both Roger Hutchison & Akhil Shahani are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Roger Hutchison has sinced written about articles on various topics from Room Furniture, Health and Games. You can find more advice at TheCompleteMarketer.com blog. Roger encourages you to go there and join in on the discussion! Heck, you just might learn. Roger Hutchison's top article generates over 33100 views. to your Favourites.

Akhil Shahani has sinced written about articles on various topics from Buy a Franchise, Public Speaking and Education Toys. . Akhil Shahani's top article generates over 22200 views. to your Favourites.
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