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Financial crisis in small business was quite obvious as the larger players in the global market started getting wiped out one by one. Rise in inflation, rise in oil prices, higher interest rates, increasing demand and low supply of liquidity, lesser number of orders and increasing demand of the employees. All these along with huge number of other factors contribute towards the slow down in progress of the smaller business house and may even result in complete closure. Global financial crisis has made many of the leaders whether they belong to large companies or small companies fall in trouble waters due to the insufficient market flow in all terms whether it is in terms of demand or supply. Consumers are also affected by the financial crunch and that is the reason why their own personal demand has decreased and this has affected many of the companies which are in to domestic products. Many of the smaller business are either dependent on either retail customers like you and me for increase in their sale and profit and many other companies are dependent on the bigger names in the industry. These smaller companies act as a vendor manufacturer, supplier or trader for
these big names in industrial world but since these big names are equally affected the affect directly comes on small business houses. There are many other factors which have lead to closure as well small business house filing bankruptcy and there are not many ways it can be solved until the government takes some initiative and change certain rules and regulation of the trades and eases the tax liabilities. There is a large amount of tax liabilities which this small business houses are not able to fulfil due to less numbers of order or due to no order and that is why maintenance of the business in terms of infrastructure cost, employee salaries, tax liabilities, establishment cost, daily expenses, loan liabilities, debt settlement etc. Due to less number of orders the break even point is not reached and this leads to bigger problems like pending bills which over few months time becomes a big amount which again due to same condition of the business cannot be paid. Thus, leading to lenders and the bill owners coming up together to grab the collar of small business leading to its closure. All the investment in this case gets wiped out in the fraction of the second and the business assets in case of small business are too small to fill up the gap made by global financial crisis. |
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