Economic Conditions

The economy is defined as the collective activity by businesses and consumers. Ideally, an economy should be expanding; that is, more Goods and Services produced and sold (measured by GDP—Gross Domestic Product)

An economy can be growing, resulting in more jobs, higher willingness of consumers to spend, and better business conditions. Or an economy can be contracting, resulting in job losses, an unwillingness of consumers to spend (lower  revenue for businesses) and poor business conditions.

A wise business owner will analyse current economic conditions and projections prior to establishing a firm. As a business operates, the external economic conditions will change.  Business owners must be aware of these changes and change their activities to suit the conditions (production rates, recruitment, setting prices, cash position, change product mix, alter advertising…)