Economic Recession

The recent economic recession faced by not only the United States, but also major countries across the globe, has made it tough for businesses to keep operating at a profitable level and forced many to downsize their personnel or to even go bankrupt. In fact, this tough economic period has caused consumers, whether they are manufacturers buying raw material or an average person buying food at the grocery store, to be a lot more conservative with regards to their needs and spending. Consequently the small business sector, which relied on niche markets and customers that value quality over price, became the sector most affected by the economic recession. As a result of this lower demand, many small businesses have had to implement new or improved
On the other hand, businesses regularly try to attract customers by offering incentives to buy their product or services. Rebates, discounts, free merchandise, and reward systems are all examples of incentives used by businesses to attract consumers. Also, business will often increase their level of customer experience and social responsibility in order to seduce customers and establish strong brand equity.

During a time of recession where revenues are lower, small businesses still incur the same amount of fixed expenses; therefore cutting down on theses expenses is essential to realize positive earnings. The most effective yet unpopular way to cut down on fixed expenses would be to lay off personnel or outsource some business functions. However there are different ways to cut reduce cost such as using a reorder point inventory system, which allows the company to store only the goods necessary to meet the orders from customers, thus keeping their inventory at the lowest point possible, and automatically reorders the necessary quantity of goods from the supplier as more customer orders are processed. This technique would require the owner to invest a large amount of
One way to attract consumers is to build brand equity, which adds value to a brand and results in a business being popular. Building brand equity can be achieved by creating a customer experience, which requires the entrepreneur to distinguish himself from other similar businesses by offering the customers a unique life experience while they are purchasing or consuming a product or service. Coming up with a good concept for customer experience is a hard task, but implementing it might not always be expensive or difficult if the idea is simple and efficient. A good example of customer experience created by a small business is “Mochi”; Mochi sells frozen yogurt and lets their customers prepare their own ice cream cup by choosing between different flavors and toppings. This unique self-service concept has made the experience of going out to eat ice cream unique, and it is the reason why many customers prefer Mochi to other ice cream parlors. In addition, an effective way for an entrepreneur to build the brand equity of his business and attract consumers would be to become more socially responsible by donating to charities or non profit organizations, going “green”, or reducing waste and pollution. An example of a socially responsible entrepreneur would be Blake Mycoskie, founder of Toms