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Economic Collapse: How Small Businesses Suffer Alongside Large Ones

As the steel industry crisis hits Britain, people who oversee the British economy may be faced with the potential consequences which follow on from the collapse of a large industry.

While the failure of a large industry has definite and far reaching effects for itself and the people immediately involved in it, people will lose their jobs, the economy will feel the strain, and there will be a gap in the market for anyone who wants to make use of their services, the collapse of a large industry has far more ramifications than that, and they can be felt across the board.

Small Business – Impact From Change of Industry

Small businesses in particular can be vulnerable to any change in industry. The steel industry crisis has meant that many small businesses are now in the very precarious position of not knowing whether there will be business for them tomorrow, with all the instability that the crisis entails.

Larger industries, by their very nature, need to cultivate a variety of different supply chains in different parts of the country. This can have the effect of smaller businesses cropping up in these areas purely to support the supply chain. When the original industry falters or fails, the result is that many of these small businesses no longer have any reason to exist, so they fade away, resulting in damage to the local economies they were located in.

The Workers

When industries fail on a large scale, those who feel the hit most are those ‘at the coalface’. Those who may have worked the last four weeks to discover that they won’t be picking up their wages as normal, and nobody knows when they will receive what they have earned, if they ever do at all.

In towns where one large company, or a group of companies in one industry are the main employer(s), the failure essentially takes money out of the pockets of those who would have been using local shops, and the knock on effect continues, sometimes in an irrecoverable downward spiral that requires significant intervention to reverse.

A Fixture of the Local Economy

A small business which exists to support a larger industry will, if the large industry lasts long enough, become a fixture of the local economy. These small businesses provide jobs, and bring money, opportunity and people into their area, and can be a catalyst for gentrification if the industry they are serving is influential enough.

When a large industry fails or falls into crisis, it won’t be the only casualty.

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Shaikh & Co Accountants

51 St Mary's Rd, Tonbridge, Kent,TN9 2LE - Tel:01892 552696