The cantillon effect describes the phenomenon in which the closest benefits from printing money the most. Large institutions, banks, organizations and companies are close to money. Larger groups that represent large amounts of adjusted earnings are also close to money.
What are Small and Medium Enterprises and Small and Medium Enterprises? A small business is usually defined as an organization with fewer than 100 employees. A medium-sized company is an organization with 100 to 999 employees. According to the Small Business Administration (SBA), small and medium enterprises employ 47.1% of all private sector employees.
There is another level of business determined by a particular country or organization. Small businesses employ less than 10 people, sometimes as little as $250,000 a year, and even $500,000. It is most business.
These businesses are an important part of downtown and local communities. These businesses include local bars, local retailers, local restaurants, auto service stores, home goods stores, florists, and floor and lighting stores.
However, whether it is headcount or annual revenue, it is the difference between income and spending that makes or breaks the business. Too much red ink will kill your business. The goal is to increase income rather than cost. Most of the costs tend to be capital equipment, inventory costs, and wages.
Much is written about the biggest and most damaging effect of inflation on low-wage people. This has become apparent in the past twenty months.
Inflation often has the greatest impact on small and medium businesses. What is required is to counter the effects of inflation.
These small businesses need Bitcoin the most.
Some of the reasons why inflation has the biggest impact on these small businesses:
1. Economies of scale. Large companies often benefit from economies of scale. Buy more and get discount. Small and medium businesses do not have this advantage.
This means that the smallest businesses will be hit hard by inflation, which leads to higher prices or, in some cases, the need to lose money.
Raising prices to offset higher costs can lead to a loss of business, often resulting in large companies, and thus potential losses.
2. Wages. With inflation, companies have to raise their wages. Small and medium businesses face problems of scale and cost, which makes it more difficult to raise wages. Large companies can offer higher wages and pass the increase on to a much broader client base.
This can impair the ability to attract workers and thus the ability to be productive and serve customers. There is a war for talent, and it continues.
3. Sensitivity to depression. Small and medium businesses are more prone to recession.
Small and medium businesses accounted for more than 60% of unemployment during the 2008 recession, according to a recent Brookings Institution report. Additionally, given the effects of COVID-19, they are expected to be the same or better.
Unemployment can be viewed as a substitute for lost sales if the company was unable to support previous levels of employment.
4. Unable to manage technological changes and supply chain disruptions. With the economic blockade, who is trying to make technology go online fast? Most small businesses or large organizations probably have the resources and scalability to implement software online.
Who do you think will receive the last or late shipment in a supply chain disruption? It is the smaller and smaller buyer.
Even the smallest companies were in the last row of COVID-19 bailout loans granted to temporarily ease the economic slowdown for many businesses.
5. Risk of failure. There are many reasons why small and medium businesses fail. Business losses are certainly a big factor, according to a paper prepared by the Federal Reserve Bank of New York. And you cannot do business unless you receive the essential supplies for your business.
According to a report from the Federal Reserve Bank of St. Louis, if we could read the impact of the past crisis on the tea leaf and the smallest business of small and medium-sized enterprises, it would be as follows.
“In the Great Recession, very small businesses withdrew at roughly twice the rate of the economic average. If they survived, they also saw an even greater decline in sales. Even very small businesses with a relatively large number of exits did not have low exit rates.”
The numbers from the recent disaster are not a good introduction to the smallest facility in the midst of the COVID-19 crisis.
The smallest companies are part of the individual and sovereign center of every society, and we have seen many companies go bankrupt in this pandemic. And, as mentioned earlier, there are so many Americans employed in these types of businesses that they can still survive for the security of our economy and the vitality of our community. essential.
Will Bitcoin as an inflation hedge by assessing the value of Bitcoin help other SMEs survive and start new ones and grow?
Yes I think so.
This is a guest post by Mark Maraia, Heidi Porter, and Colin Crossman. The opinions expressed are entirely unique and are not necessarily BTC Inc or Bitcoin Magazine..