Small Business and Macroeconomics ? SGTreport ? The Corporate ...

by Vedran Vuk, Casey Research:

When anyone talks about macroeconomics and the boom/bust cycle, they more often than not focus on the big picture: GDP growth rates, inflation expectations, and central bank policies. In most of my articles, I am as guilty as anyone else of this. So today, I want to switch it up and discuss the boom?and-bust cycle from the perspective of a small business. How is that a period of low interest rates and excess credit can cause such widespread destruction among enormous banks as well as small businesses? After all, it?s not like Mom and Pop were playing with risky derivatives.

Suppose I was starting a new business during a credit bubble. Let?s say that it?s something somewhat bubble-related, perhaps a high-end kitchen accessories store. Since I?m a very prudent person, I?m not just starting my business on a whim. In fact, I?ve done some serious calculations to discover that my monthly profit margin would be about 20%. It?s not huge, but enough to start my small, high-end kitchen accessories store.

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Source: http://sgtreport.com/2012/09/small-business-and-macroeconomics/

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