In the current economic climate in Britain, the risks of starting up a Essay

In the current economic climate in Britain, the risks of starting up a new business outweigh the benefits, Discuss - Essay Example Admittedly, some very recent reports of Britain's Office for National Statistics indicate a hopeful improvement in the economic performance of the nation with regard to its GDP that showed ‘over 3 percent annual growth rate’ unlike other world economies (Schomber and Milliken). Although the 0.8 percent growth it showed between July and September ranks its fastest pace in more than three years, the employment growth has not yet showed significant improvement; and this makes the sustainability of the economic recovery uncertain. Hence, from an entrepreneur’s point of view, the risks of starting up a new business in UK in the current economic climate outweigh the benefits. Some experts believe that Britain’s economy is built on shaky foundations. To illustrate, as Elliot, the Guardian reporter points out, the economy is exceedingly depending on private, ‘and to a lesser extent to public borrowing’. He also says that the so called economic recovery is concentrated only in certain sectors and as a result, ‘manufacturing base is shrinking’ and the trade deficit is mounting. Obviously, all these reports reveal that UK economy currently is relying on a debt based recovery which will raise long term financial stability concerns. The growing rate of consumer borrowing is one of the symptoms of this economic crisis. Another point to mention here is that the highlighted GDP growth in fact does not add up for the country’s working class. For instance, over the past 12 months, the use of food banks has gone up by 170% in the nation, and still five million people in the UK are currently living in fuel poverty (Cresswell). The financial position of an economy can influence a company’s stability and sustainability. New businesses are highly vulnerable to risks related to the economic stability of the country in which it operates. New entrepreneurs often fail to plan financial projections or create good working e nvironment. It is necessary for new businesses to determine if their product or service is strong enough to sustain the market completion and other challenges. Business owners with little knowledge in current trends and socio economic changes tend to fail in their venture. In other words, it is important to study the socio economic and political conditions of the business destination before commencing operation. Finding a new appropriate business is also a challenge in the new environment. It requires extensive research to determine the most relevant product and business concept in a competitive environment. One recent survey report reveals that 31% of the participants opined that finding a new business would be the major challenge for their organisations in 2013 ‘followed by rising costs (14%) and holding onto customers (13%)’ (MT Management). At this juncture, new entrepreneurs must be cautious about the current economic climate in the UK regardless of the recent impr ovements. This is because even Britain's big businesses have just started spending their cash piles after the recession. Although expansion is their higher priority, for the time being, their decisions seem to be an experiment. When it comes to new businesses, they usually confront insufficient cash flow, lack of expertise, and knowledge. Although new businesses fail due to a multitude of reasons, there are