Bowton Spice Bazaar
Section 1 - Introduction
Chloe's restaurant has had to close due to poor cash flow.
Cash Flow is the flow of money into and out of a business over a period of time, calculated at the exact time the cash physically enters or leaves the bank account or till. Many businesses will forecast cash flow to identify when they might experience cash flow problems.
There are many factors that can lead to poor cash flow.
Impact On Businesses In Bowton And Chloe's Business
In a recession, many people face falling incomes and consumer confidence will be low. As a result, some people may have less disposable income to spend on luxuries (Such as a meal at a restaurant Like Chloe's Restaurant). Businesses selling these products may see a fall in the demand for their business and thus a fall in revenue and profit.
Those who are made unemployed will have lower disposable incomes and therefore have less money to spend (See Recession). Some businesses may benefit if they are looking for workers as there will be more potential people to employ.
Increase In VAT
If there is an increase in VAT, business will have to increase their prices to cover costs and therefore may see a fall in demand for their business. This will especially affect luxuries like a restaurant as people will be reluctant to spend more money.
Rise In World Food Prices
If food prices rise, the cost to a restaurant of providing a meal will increase. This will reduce profit margins and ultimately profit unless the restaurant increases their prices. However, the problem with the economy in recession is that any increase in prices is likely to see a fall in demand.
Fall In Bowton Population
If the population...