Recession
First let us understand what Recession is. In economics, a recession is,
a business cycle contraction when there is a general decline in economic
activity. So, in recession there is a reduction in business activity i.e.
reduction in Demand and Supply. During such time there is significant reduction
in expenditure (Investment Expenditure and Consumption Expenditure).
Policies Adopted
To minimize the effects of recession on the economy, policy makers
prepares the policy which will give boost or will help to increase business
activities. Government will adopt measures like lowering interest rates, cutting
down the rates of various taxes, etc.
Opportunity to Entrepreneurs
Recession is the best opportunity for the entrepreneurs to start or set
up new business in the market. As there are lower interest rates, various
concessions or benefits in taxes, increased rate of unemployment, etc.
available, which will help the business and also provide the support to the
economy. During the normal economic conditions the risk of starting or
investing in new business or startups is high as compared to investing in well-established
or matured firms or companies.
However during recession the risk in investing startups is much lower
as compared to the risk in investing in old giants. The point is the risk of
starting new business more or less is equivalent to the risk of reduction in
business activities of the existing once. This is because of borrowing cost,
employee cost, and most importantly capital cost & potential business with
customers.
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