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John McMalcolm

John McMalcolm is a freelance writer who writes on a wide range of business topics, from small business management to biographies of famous entrepreneurs, such as Richard Branson, Mark Cuban and Steve Wynn.

John McMalcolm has written 28 articles for SB Informer.
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Five Signs Now is Not the Time to Open a Small Business

John McMalcolm

July 02, 2013


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Starting a business requires careful consideration and planning.

Other than developing effective business strategies, you also have to choose the right time to open your business. If you decide to start your business at a time when economic conditions and other factors are favorable, you will have a better chance of succeeding.

On the other hand, if you choose an inopportune time, you may encounter certain problems that can jeopardize the growth of your business.

Here are five reasons why you may not want to start a business now:

Low Discretionary Income

Although the U.S. economy has been showing signs of recovery in 2013, the unemployment rate is still high.

As a result of high unemployment, many Americans do not have enough discretionary income to spend as freely as they want to, leading to a decrease in demand for certain products and services.

Although non-discretionary products are still in demand, it can be difficult for new businesses to attract consumers, considering that there are many established companies offering such products. If you are planning to start a business in 2013, you have to make sure there is a big enough market for your products or services.

High Level of Competition

The economic recovery also makes businesses more optimistic about the future.

Many aspiring business,people may want to start businesses in 2013 and existing businesses may make an extra effort to gain a competitive edge. This means that you will face a higher level of competition if you decide to open a business this year.

 Difficulty in Obtaining Small Business Loans

Almost five years have passed since the banking crisis, but small business owners are still having trouble getting loans at reasonable rates. Lenders are generally not going to adopt a more lenient lending attitude, and some of them are not willing to offer loans under $50,000. 

Many small business owners try to get loans from the Small Business Administration, but only a small percentage of them have been successful. It is expected that small business owners will continue to experience lending problems beyond 2013.

Shortage of Skilled Workers

Changes in technology have made it increasingly difficult for businesses to hire skilled workers.

Although there are many colleges and technical schools offering skills training programs, it takes time to train students to fill technical positions. This can be a problem if you are opening a business that requires skilled workers.

Readiness to Start a Business

Other than looking at external factors, you should also make sure that you have the necessary skills, experience and resources to start a business.

To ensure that you will be able to run your business effectively, you need to have at least two years of working experience in your field. Also, it is recommended that you have enough start-up capital to cover operating expenses for the first six months.

If you find that now is not a suitable time to open a small business, it is a good idea to wait until the conditions are more favorable.

Remember, a little patience can go a long way in ensuring business success.


                   



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