The modern world lives in the consequences of the global financial crisis. The crisis has started in 2008 and still affects our life. The reasons for the crisis were different. The most influential reasons were housing crisis, credit character of the world’s economy, manipulation with financial instruments, etc. In fact, fundamental reasons for the crisis have not been changed. That is why similar situations are expected in the future. Any person should be ready to lose a job again. The question is how to eliminate such possibility. It is believed that one of the most appropriate solutions to this problem is starting a small business.
Why is it good to start a business in such difficult economic conditions? Probably, it is better to find a reliable job, where it is possible to earn sufficient money for living. The answer can be that it may be even more difficult to find a job nowadays. Companies do not hurry to hire new employees. In fact, they are more worried how to keep existing employees in terrible financial conditions. The situation in the world shows that the crisis is finally going to finish . Small business has a lot of advantages over typical job. These advantages are provided below.
First of all, starting a small business does not require significant financial resources. Any person may begin its own business. Usually, a small business is started in a form of family business. Thus, it is a good chance to start some business dynasty.
Second of all, a person is able to show the best qualities of his/her personality. It means that, when a person is good in dancing, he/she does not have to work as a lawyer. Probably it is better to concentrate efforts on opening the own dancing school or studio.
Third, it is always better for a person to do what he/she likes. It brings satisfaction and the person is happy, since the overall quality of life is increasing. The main goal of a person’s life is to be happy. One form of happiness is to do what you like in this life.
Finally, the person does not have to work for a boss. Thereafter the motivation of this man/woman is significantly increased in such conditions. The reason for it is that a person realizes that his/her personal success depends on quality of the work done.
A small business is also beneficial for government. It is a basis of the middle class of society. In turn, middle class is the main precondition of democratic society. The government is generally interested in development of a small business, since it increases the degree of well-being of people and overall economic prosperity of a country. That is why it is not surprising that governments in the different countries support development of a small business in the different ways. It would be unreasonable not to use such an opportunity.
The following question is also very important. This question is what form of business organization should be chosen. For example, two main forms may be pointed out – the sole proprietorship and the partnership.
There is no need to explain these terms. It’s up to a new entrepreneur to decide whether he/she needs a partner. The final choice will depend on the industry that is chosen, on character of business and on financial opportunities. Generally, if a person has a reliable partner it is better to cooperate with him or her. Also, it is necessary to stress on avoiding looking for partners among friends. It is important to distinguish between these spheres of life and business.
The second question is where you can get money to finance a start-up. Generally, there are two types of financing of business – the debt financing and the equity financing. In our opinion, one of the most appropriate definitions of the term equity financing is the following.
“Equity financing is the act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation” (Equity financing definition).
Simply speaking, equity financing is the usage of founder’s own money for starting a business. On the other hand, debt financing is based on the usage of borrowed money. Each type of financing has its own advantages and disadvantages. The main advantage of equity financing is its cheap price, while debt financing is expensive, but it is not needed to share power, using debt financing.
It is believed that type of financing depends on possibilities of a business owner. Debt financing is not the best option. It is always possible to apply in order to get special governmental grants. As it was already mentioned, the government is interested in development of a small business and it provides grants and other bonuses for people that start it.
To conclude, the following facts have to be underlined. A small business is a good choice for any person in the conditions of crisis or normal development of the economy. Governments are also interested in development of this type of business. That is why a person should try to start a business and feel all the mentioned advantages on his/her own experience. So, do not hesitate on the way to dreams.
Equity financing definition. Retrieved January 26, 2013
Starting a business and startup funding. Retrieved January 26, 2013
Starting a small business. Retrieved January 26, 2013