Essay: Risk Factors Involved for Opening a New Business

1. The Economy is Weak: The unemployment is increasing on a continuous basis and its currently at 6.1% which is an alarming rate and its at a very high scale. The economy has slowed down and around 760,000 jobs have been lost overall and on an average the economy is loosing 43,000 jobs every month which is an alarming rate again. The rates are definitely record breaking. The house market has really suffered from the economic meltdown and prices for property are decreasing. But due to tightening of lending standards the investment on the house industry has fallen tremendously. Thus this factor is the fourth most important for the decision (Siegel, 2002).

2. Financial Crisis: Since the economic meltdown has already been discussed and the housing market has really suffered, unemployment is increasing and the credit crunch has reduced investments thus GDP is decreasing and economic growth is decreasing enormously. The SBA loans have been halted due to a loss to the agency and lending standards have been tightened to a great extent. The economy is not good for new businesses and also small businesses especially. Therefore, this factor is the fifth most important for the decision (Goodman, 2009).

3. Economic Conditions need to improve for an optimistic outlook of the economy. The small business are suffering and the economy will take a lot of time to recover for it to be good for small businesses and new ventures. The recession is exemplary this time and record breaking rates have shown an economic slowdown overall but as history proves it takes years for the economy  to get back into action since this time recession is truly bad compared to previous records. Thus it will take a good amount of time for the economy to improve for small businesses in the economy and also for the new ventures (Grynbaum, 2007).