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Empowering Small Businesses During Tough Economic Times

To start with, it should be noted that small businesses are facing certain difficulties and it is important to empower them during tough economic times. For example, the world economic crisis at the end of the first decade of XXI century found expression in a wide range of socio-economic phenomena. Small business sector was in the most difficult situation, due mainly to sharp and deep decline in demand and the deteriorating credit conditions. In different countries the level of decline in sales of small businesses varies considerably depending on the economic development and integration of these countries in foreign trade. On the state of small business dramatically demonstrates the increased number of bankruptcies in the USA in 2008 it increased to around 44 thousand (compared to 20 thousand in 2006, and 28 thousand in 2007) and continued to rise in 2009.

This is because in times of crisis growing uncertainty about the prospects for the future development of all enterprises have significantly reduced capital expenditure program, attracted by bank loans. At the same time reduced the requirements to obtain working capital, with a sharp reduction of investment capital, according to Sheri Watts. In a crisis, all countries experienced tightening of bank credit policies with respect to all borrowers, including small businesses, in terms of guarantees, collateral and reduce the size of the loans. Thus, in most countries surveyed have significantly faced deteriorated lending conditions for companies in the sector of small businesses, as stated in How to Maintain Employee Morale During Hard Times.

Confronting the worsening conditions of access to credit, small business sector companies are seeking alternative ways of financing, the mobilization of its own reserves for self-financing, the reduction of investment and innovation projects, and even termination. The bulk of small businesses can very effectively use financial resources, but access is difficult, especially in the global crisis, and it is a major obstacle to the creation of new small business units, to their survival and further development. Particularly active in seeking additional sources for a comprehensive resource to ensure small businesses are often involved in the implementation of investment and innovation projects. This is due to the realization that after the crisis, the results of investments in modernization and production of innovative projects will be an important means of achieving economic success in a global economy based on the latest knowledge and scientific and technological achievements, as described in How to Survive Tough Economic Times.

There are certain measures to support the level of sales, to ensure continuity of cash flows and the provision of working capital is stimulating the development of public demand by increasing consumption through investment. In some cases, this includes an increase in public spending on health, education, technological modernization and infrastructure development. Small businesses are engaged in these areas, and may receive direct or indirect government support. One of the most effective and immediate ways to improve the financial situation of enterprises is to ensure the continuity of cash flows and promote the sustainable provision of working capital. Steady cash flow contributes to the normalization of the enterprise and becomes the basis for their further development.

Works cited

6 Counterintuitive Ways for Entrepreneurs to Trump a Tough Economy. 23 September 2011. <http://www.smallbusinesssuccess.biz/articles_week/ways_to_beat_tough_economy.htm>
Linda J Banks. 2011. How to Survive Tough Economic Times. 23 September 2011. <http://ezinearticles.com/?How-to-Survive-Tough-Economic-Times&id=1224652>
Lucia Holm. 2011. Overcome Fear in the Economic Crisis. 23 September 2011. <http://thinksimplenow.com/happiness/overcoming-fear-in-the-economic-crisis/>
Rebecca Moore. 2011. How to Maintain Employee Morale During Hard Times. 23 September 2011. <http://www.ehow.com/how_6016290_maintain-morale-during-hard-times.html>
Sheri Watts. 2011. “Keeping it Real!”-Small Business Guide to Survival During Tough Economic Times. 23 September 2011. <http://www.indysmallbiz.com/2011/01/keeping-it-real-small-business-guide-to-survival-during-tough-economic-times/>