Business Cycle and Growth pt 3

Business Cycle and Growth pt 3

by Tylo Bader

​Exit Strategies

​•Are plans developed by business owners to leave their business

•Are important for knowing the long-term plans of a business

−for example: if a business wants to be listed on the stock market, it will have to follow specific accounting regulations from the start

​Exit Strategies

​•Should be developed while determining business plans

•Can include:

−selling the business

−going public

−liquidating the business

​Selling the Business

​•Can allow for an easy exit from a business, which detaches the owner from the business and gives them the money from the sale

•Is most likely used when:

− the business is becoming a hassle for the owner to control on their own

−the owner wants to diversify the worth of the business over multiple properties

​Selling the Business

​•Allows the owner to:

−negotiate for equity in the buying company

−earn dividends afterward

​

​*** Equity: the value of shares which are issues by a company

​*** Dividends: distribution of a share of the company's earnings to its shareholders

​Going Public

​•Entails offering shares of a company to the public market

•Is most likely used when:

−the business is challenged with an opportunity to grow

−the success of the business is significant

​Going Public

​•Can limit exit options for a business owner

−when shares are traded in public markets, it is difficult for the business owner to keep more than 50 percent of stocks

−owners lose control when the company is public

​Liquidating the Business

​•Is shutting down the company and closing the business doors

•Is used when the markets the owner invested in could implode

​Liquidating the Business

​•Is most likely used when:

−the success or growth of a business has come to a halt

−personal issues arise with the business owner and there is no buyers interested in purchasing the business

•Can be looked at as a “last resort”

−owners almost never receive the full value of their company using this strategy

​Business Cycle Indicators

•Are used to foresee changes in the economy of a country

•Help predict peaks and troughs within business cycles​

​Business Cycle Indicators

​•Account for reports comprised of statistical data which are studied by economists

•Should not be trusted to always accurately predict changes in the economy

​Business Cycle Indicators

​•Include the following factors:

−labor force

−wages, labor costs and productivity

−exports and imports

−national defense

−personal incomes and consumer attitudes

−output, production and capacity utilization

Multiple Choice

Which of the following is NOT an indicator of the business cycle?

• Labor Force

• Wages

• Labor costs and productivity 

• Birth Rate

Multiple Choice

Which of the following describes the term productivity?

• Measurement of physical output for each unit of input used, usually referring to labor hours

• The period in which business activity has reached a maximum

• Two consecutive quarterly declines in Gross Domestic Product

• The sum or whole amount of something

Multiple Choice

Which of the following is NOT a business cycle indictor?

• Labor force

• National defense

• Personal incomes and consumer attitueds

• Out of date products