Small businesses are the life-blood of an economy. They provide the most diverse variety of job opportunities to ensure individuals with all different skills and interests have a place of employment. Additionally, they also provide a unique blend of products and services which allow them to grow and continue hiring, even when times become difficult. However, due to the smaller size of these businesses, they are also more vulnerable to an ailing economy.
Unfortunately, when a recession occurs, small businesses are the first to get hit. This problem revolves around the fact that most small businesses do not have the resources and ability to stay afloat when sales slow down over an extended period of time. Larger companies have enough of a surplus as well as assets to sustain when a bump in the road becomes prevalent; this is simply not the case with small businesses.
When the economy begins effecting the spending of potential customers, the effects can become detrimental for small companies seemingly instantaneously. Depending on the strength of the company, as well as the management, lay-offs can begin occurring within a couple of months,. As small businesses begin laying off their employees, these employees might have difficulty finding a new job, and find they have to slow down spending to ensure they can cover their necessary expenses; such as bills. This can quickly create a snow-balling effect that helps contribute to and reinforce the recession, causing more lay-offs and drastic decreases in spending to the point where larger companies begin to feel the pinch.