Economic conditions are an important point to consider when evaluating the impact of the overall business climate. The economic indicators reported in the news are usually for the whole country and may not be a good measure of the environment an auto repair business is operating in. Further, there are numerous economic indicators and some may be more applicable than others. The key to evaluating economic indicators is to determine which are most pertinent to the local economy and use them when evaluating economic conditions.
- The Current State of the Economy – There are many economic indicators and only a professional economist can monitor more than a few of them. Gross Domestic Product (GDP) or the sum of all goods and services provided in a country during a one year period is the most commonly used indicator. The question to ask when evaluating economic conditions is whether the economy is growing, stagnant or declining. Unfortunately GDP is measured at a level that may not be reflective of local or personal economic conditions. Measures of local economic indicators such as real estate and employment rates can be found on the Internet. Local indicators may be more meaningful when evaluating the economic circumstances surrounding an auto repair business. If the economy is stagnant or declining consumer spending will remain constant or shrink. In a growing economy spending will grow as well. The object of recognizing economic status is to adapt business practices to conserve or expand based on the circumstances.
- Customer Disposable Income – Based on economic circumstances some customers may have more disposable income than at other times. During times of less disposable income people may tend to spend less on vehicle service or upselling of recommended services may be more challenging.
- Employment Rates – Employment rates can be a good measure of economic conditions although the unemployment rate produced by the bureau of labor statistics can be somewhat questionable because they only count as unemployed people who are actively seeking work. Nevertheless when employment rates are high it can become more difficult and sometimes more expensive to find and hire quality employees. On the positive side – when employment rates are high people will have money to spend.
- Access to Credit – When people have access to credit – money flows more readily. They will be more willing to spend even if they don’t have money on hand if they’re not too over-extended. If they don’t have access to credit or have more debt than they’re comfortable with they’ll be less willing to spend. In the auto repair business this may mean that people will delay maintenance and repair work or that they’ll be less willing to purchase recommended services.