Have you ever heard this phrase? “It’s like the wheels are falling off!”
Do you know what it means? It’s usually said by someone who has just made a mistake that is causing lots of problems for them. Maybe they forgot to do an important task at work, or maybe their car broke down unexpectedly. Something bad happened and now things are much worse than before!
But why did their wheels fall off? Why were they unable to prevent the bad thing from happening?
The answer is: because they don’t have a business cycle.
What is a business cycle, you ask? A business cycle describes the regular and predictable patterns that businesses follow over time. It tells us how long it takes for a company to make money, spend that money, then start making more money again. Business cycles are found in very successful companies, but not every successful company follows the same pattern! In fact, there are three main types of successful businesses – do any of them sound familiar? Let’s see if we can spot your business
Now let me ask you another question:
What would happen if ALL the wheels fell off your car?
Nothing good, right?! You’d be stranded on the side of the road with no way to move forward or backwards. You could call for help but by then your whole day might be ruined!
You might be late for work or you might miss your flight. If you are old, it could make getting around very difficult indeed.
Now imagine if this happened to many people at once. What if everyone’s cars stopped working? Traffic would back up everywhere! Companies wouldn’t be able to deliver their products to stores, schools wouldn’t have any lunches, and hospitals wouldn’t receive the supplies they need to help sick people get better. It would bring society to a standstill! Everyone would be affected.
That’s what business cycle theory is all about:
how one part of society affects another part of society. Just like with the wheels on your car – when they’re all spinning at the same speed, the whole thing (your car, our society) tends to work better. Everyone has a role and when we each play that role it creates success for everyone!
Let’s look at some spokes in the business cycle:
1) Workforce/labour force – individuals who contribute their time or skills to a marketable product or service.
2) Management – people making decisions about these products or services.
3) Entrepreneurship – market leaders developing new ideas and innovations.
4) Capital goods industries – companies providing machinery, buildings, and other ways to support production. 5) Consumer goods industries – companies providing finished products that consumers buy for personal use.
6) Infrastructure – roads, bridges, and other ways to get people and goods from one place to another.
7) Government – the rules that help us all get along and contribute to society.
All these different groups make a difference in our lives! Each of them plays a role in moving society forward. When we work together, we can achieve great things! Now take a look at your business cycle: does it have all 8 spokes? If not, how could you add some more? And if so, congratulations! You are helping support success for everyone!