Inflation is the increase of rates of goods and services. This can affect the cupcake business in a negative way as the customers may not buy a lot of products as the prices for other stuff have increased as well. This will conclude in our business not making enough profit as we may need, which means that we will not be able to pay taxes and wages to the employees. This may also end up with our business not earning enough to pay suppliers. In order to prevent inflation affecting our business we will decrease the prices of our product for a week and see what our results end up in. If they help us make more profit or increase our customers we will keep them as our regular prices otherwise we will have to increase prices if there is no change.
Another Factor which can affect our business is recession. Recession is a general slowdown in economic activities. During a recession businesses as well as the country do not make enough money. It can end up in people losing their jobs due to business not earning enough to pay wage, this can result to the number of unemployment increasing. Unemployment results to people not having enough money to pay taxes or even for food. A main cause of recession is inflation and as mentioned before this can conclude in us not being able to pay employees and this can end up with them losing their jobs. To overcome this problem we will decide to reduce the amount of salary if they have an objection then we give them the choice to stay or leave because we have no other choice.
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