Basic economics principles suggest that
- People face trade-offs.
Every decision involves choices, and more of one good means less of another good. Income and wealth are not limitless, since there is only so much time available. Trade-offs apply to individuals, families, corporations and societies.
- People respond to incentives.
If rational people compare costs and benefits, then changes in either one may change decisions. An example of an incentive that people respond to, are changes in prices. In general, people are more likely to buy something if it is cheaper. If an action becomes more costly, then there is an incentive to switch to other choices. Note that all actions have substitutes.
With this being the case when the supply of a good or service is greater than the demand, you will naturally get a situation of market saturation. With our current economic climate being less than the perfect ecomic model, it is important to remember the basics.
TOP 5 THINGS TO REMEMBER IN A RECESSION
- Value Proposition - What do you stand for. What makes your product service, concept or idea special
- Brand Proposition - What defines you? Is it your service level, or is it your price point.
- Customer Retention – Look after the customers that are currently spending money with you
- Cash is KING – You have to ensure that money continues to come into your business. Don’t do what everyone else is doing and lower your prices. All that does is say “Hey I don’t think my product is worth the money”
- Time is a healer. It may have been something your mother once told you when that girl (She shall remain nameless) broke your heart!
However the principle still applies. All economies go through ups and downs until they reach a natural equilibrium again.
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