Business during economic crisis Essay
Why I would open my business during economic crisis. Starting a business during recession presents both a challenge and an opportunity, bearing in mind that recessions are the worst economic times. However, as an entrepreneur with sufficient capital, recession would not stand in my way to opening my own business because there are a number of opportunities that economic downturn comes with that as an informed, conceptual and focused business person I would utilize to stay strong throughout the crisis.
To begin with, success in opening a business during recession lies in the entrepreneur’s mindset; seeing the recession as the doorway towards an economic boom assists in ensuring that the entrepreneur remains prospective and objective in future. Here, recession presents to me a great opportunity to position myself, familiarize with the industry, gather data, strategize, establish relationships and identify potential market shares.
As suggested by Ferrers (2010), there are three major issues to concentrate on during recession that will put the business unto the right gear in preparation for the boom; the long term goals, the business nature and the customers. Research allows time for research and development and strategic market planning so that when the economy begins to pick, no time
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Furthermore, starting the business during a time of economic downturn will enable me to experience the risks and challenges that economic crisis brings to the business and such knowledge will critically important because, the business will develop ‘shock absorbers’ that will be used for survival during future recession since recession are part of any economy. Simply put, I would rather open my business during an economic crisis than during boom because the experience and the foundation laid during recession will enable my business to reap optimum benefits during the good economic times.
Factors that an entrepreneur consider before choosing a form of ownership There are four basically four categories into which an entrepreneur may engage in business: a limited liability company, a corporation, a partnership or a sole proprietorship. In making the decision amongst the four options the following considerations should be put into mind by every rational entrepreneur: The capital layout is the major consideration. Forms of business ownership vary in their capacity to generate start-up capital: some forms may be preferred over other depending on the capital the entrepreneur requires.
In addition, as the ownership grows, the capital requirements expand and with some forms such as limited liability Company, it is easier to attract external financing (Money Forum, 2010). Tax considerations should be made due to graduated rates of tax under every category of business ownership, regular changes on tax codes, frequent income/ profit fluctuations. The entrepreneur should first calculate the tax bills under each of the alternatives.
The business liability exposure should also be put into consideration since the disparate forms offer varying security which arises from personal liability defective products and fiscal problems (Money Forum, 2010). The degree of control that the entrepreneur desires to have over the business also dictates the forms of ownership which suit the entrepreneur. For instance, those who want almost total control will be better placed for the sole proprietorship business. Also, the entrepreneur’s managerial ability is of key importance to consider because when the entrepreneur it is directly related to the control over the business.
The cost of formation and the key goals of starting the business should also be put into consideration (Money Forum, 2010). “A student whose main activity on campus is running a business is missing the basic reason for being here, which is to get an education. ” To some extent, the educator’s statement is factual but to some extent, it is fictional. Partially, I agree with the educator because the basic reason for joining college to completely dedicate one’s time and resources towards studying the course they are pursuing.
However, engaging into business and the allure of the profits that come with such business may easily make students to compromise their principal reason and concentrate more on the profit generating setups in school. On the other hand, I refute this statement because some students are compelled to do business in school to be able to support themselves with fees and other personal needs since they neither have guardians nor sponsors. Therefore, if they do not carry out profit making activities they may have to leave without accomplishing their reason for being there. Still, some students actually study entrepreneurial courses!
Therefore, in engaging in school business, they are actually doing theory course practically and it will help them to understand the theory more comprehensively and also prepare them for the larger business world once they complete college studies. References Ferrers, D. (2010). Four keys to starting a prosperous business during a recession. Retrieved from http://davidferrers. com/starting-prosperous-business-during-recession/ Money Forum (2010). What factors should an entrepreneur consider before choosing a form of ownership? Retrieved from http://moneyforums. com/forum/showthread. php? t=5584