Achieving success in sales doesn't have to be complicated or scary. Understanding and using these steps will help guide your prospect through the sales process. Consequently, banks face the situation of increase in their cash balances. During a recession, consumer spending is reduced and business sales decline. Business Cycle is defined as a series of repetitive upward and downward growth cycles in the pace of the company or economic activities of a country and guides the policymakers in the decision-making process. The increase in profit also continues in the recovery phase. As the economy begins to contract, business begins to slow down for Normal Maintenance. Recession Effects on Small Scale Industry, The Federal Reserve Bank of St. Louis: Business Cycle Phases in U.S. States; Michael T. Owyang, et al; May 2003, "Economics: Fundamentals for Financial Services Providers;" Jon A. Hooks; 2003, Explanation of the Business Cycle & Its Stages, Traits of the Four Phases of the Business Cycle. Similarly, adopting a positive approach other private investors also start investing in the stock market As a result, security prices increase and rate of interest decreases. This expansion continues till the economic conditions are favorable. As discussed above, in trough phase, an economy reaches to the lowest level of shrinking. Phases of Business Cycle. Ask if they know of anyone else who might be in the market for the goods or services you provide. Note you can ask for referrals even from prospects that say no. In this phase, debtors are generally in good financial condition to repay their debts; therefore, creditors lend money at higher interest rates.
This phase is known as peak phase. Also, your no-prospects can be a source of referrals, so it's not necessarily a waste of your time if your prospect doesn't buy. And all of this is post-fact analysis. No matter what you're selling, every sale follows roughly the same pattern of seven steps. Business Cycles: The phases of a business cycle follow a wave-like pattern over time with regard to GDP, with expansion leading to a peak and then followed by contraction. Disclaimer Copyright, Share Your Knowledge You're also selling yourself as a person to trust when it comes to finding a solution for your prospect. In general, every business cycle has multiple phases and depending on the country we can try to define business cycles. This leads to an increase in the flow of money. When 2008’s recession struck, Goldman was one of the first companies that needed bailing out. Explanation of Four Phases of Business Cycle. This goes to explain the limitations of a business cycle – people need to be aware of the fact that the future is not predictable. The different phases of business cycles are shown in Figure-1: There are basically two important phases in a business cycle that are prosperity and depression. Due to a high level of economic activity, it causes a rise in prices and profits. If the recession stage is not controlled via proper measures, more people will start losing jobs, they will start paying their loans which is going to affect the economy more. Meaning Types of Financial Plans, What is Financial Management? Business Cycle Phases Business cycles are identified as having four distinct phases: expansion, peak, contraction, and trough. People start spending again. It tries to explain to us the way in which the economy works and how that can be used in decision making. Now that we know business cycles, can we predict the next recession? I always prefer your notes.. As a result, investment and employment by organizations increases. The owner of Normal Maintenance has been in business for a long time, so he’s had some experience with the economic cycle.