Financial Accounting Ch2- Article:Small Business Owners Optimistic in Tense Times, Bank Survey Finds

Everyone, at least the ones with jobs and homes, is aware of the current possibilities of a world recession, and it is rare to find someone who is not pessimistic of the future financially; however, in this article, small business owners in BC have been surveyed, and surprisingly enough, are generally optimistic of the future. This survey enlisted the three main concerns in Canada: maintaining cash flow, managing growth in 2009, and fuel costs, all respectively in order from 1 to 3. Advice from these surveyed owners is also given, and the number one answer for starting your own business is to raise enough capital beforehand.

Link: http://www.canada.com/vancouversun/news/business/story.html?id=6d86864a-1991-4ebe-b2de-0cf76d741760

It is said the number one concern is a decrease in cash flow; this affects the financing, investing, and operating activities of the business. Therefore, the businesses for the future are more likely to repay loans much more slowly, make less profit, buy less inventory, and purchase equipment only when it is totally essential, like when it has been completely amortized, no longer of use, and needs to be replaced, and this is all due to the fact that demand for products will probably decrease. These businesses will not have to worry about dividends or share earnings, as they are small businesses and do not have shareholders.

With all of these concerns in mind, small and big business owners will have to use their cash in a careful manner, as the cash flows of businesses in Canada are most likely to go down. There are two things in this article that come as a surprise to me: the gas prices are the 3rd most concerned about things, and the lack of concerns of the surveyed business owners. One of the few positive things to come out of this recession is a decrease in prices for products, so why would gas prices be a concern? They are now hovering around $1.2/L, which is much better compared to when the prices peaked at $1.5/L a year ago. This possibility of a recession will decrease the pricing on almost everything, which is a major problem for business owners selling inventory and services; therefore, I feel the business owners should ask a qualified professional in the finance industry on what the best thing to do is right at this moment in time.