Paper Example on Startup Survival: Cost, Market Structure & Capital Needed

Cost and market structure are the major factors that determine whether a business can survive in the market. Every business requires capital to start. Other factors of production include; land, labor and entrepreneurship. Often the capital used in starting these small businesses come from loans, gifts or savings of the entrepreneur. Often, a few people especially the youth lack the initial cost to startup businesses. Despite that, for these people to maintain they need funding to improve on services or goods that they produce therefore their businesses are at the risk of failing which at most is the case due to defeat from competitors who have the funds to improve and expand their businesses.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

Further more, we require the government to intervene so that through a directive, the regulations that surround the ease of one to access a loan be softened to help people can easily access the loans. Regulations to start small businesses should also be lessened to make it possible for more of these entrepreneurs to start and run their businesses. Fee charges should be reduced to help the entrepreneurs maximize their profits which would in turn be used to expand their businesses. The government should also issue out grants to help these entrepreneurs acquire capital to start and manage their businesses. It is a major problem because many people fail to start businesses due to a lack of capital. Therefore, government intervention would highly help improve the economy as most of the population would have a source of income.

Consequentially, most of the people start businesses to provide goods or services that are highly demanded. Lack of capital to start and run these businesses denies entrepreneurs the chance to start and maintain the businesses. This implies that consumers have less or no supply of the demanded goods. According to Tarver (2019), marginal cost is the change in cost due to an additional unit of goods or services. For starters and small business, the marginal cost felt by the producer is high given that they have small incomes that cant facilitates the additional units and if so, the cost of the goods or services would be high which at most times surpasses the marginal benefit, therefore, reducing the demand of the product as consumers shift to substitutes. During the initial stages of businesses, a few mistakes happen therefore consumers prefer businesses that have been in the market longer since the small businesses can't offer services or goods with the same quality as mature or bigger business hence the consumers choose to buy from businesses that have been there or well established since they are motivated by their output(Lapavitsas& Mendeita-Munoz, 2018).

Lack of capital to start and run businesses causes an increase in the demand for goods yet there is less or no demand due to lack of businesses to produce these. The scarcity of resources such as capital makes it impossible for customers to be satisfied. The availability of capital will make it possible for various goods to be produced.

Increased government intervention will ensure that the entrepreneurs can access funds they can use to start businesses. This way, the level of dependency will reduce since people will be able to engage in various income-generating activities that help increase their standards of living. With the incomes, people will have disposable income that they can use to purchase various commodities which will imply that businesses will be able to earn more income. With financial stability, we will have a reduction in crime levels as people will be involved in constructional economic activities(Khasawneh.M, 2016).

Alternatively, failure of the government to intervene then it would be hard for people to acquire capital therefore we will have a lot of unsatisfied goods and rely on imports. The government will have less revenue as most people lack employment therefore lacks the means to pay taxes which implies that the government will spend more to provide services to its citizens. Unemployment causes an increase in social vices as people opt for a way to earn a living(DOL).

From the above, it is evident that the government should intervene so that we can be able to have a stable economy. Having goods produced locally to ensure we support local industries and reduce imports. That way we will be able to be independent since we will be locally satisfying the demand while creating sources of income that help stabilize the economy.

The government should reduce the interest rates on financial to around 10% to ensure that people can acquire loans since they can pay. Offering grants will also help increase the growth rate of businesses which will in turn earn the government income through taxes. Failure to which will restrict the number of people getting financial assistance, therefore, causing most of the businesses to collapse.

The government needs to finance most of these businesses to ensure that its citizens are employed to reduce social vices. Employment earns government income through taxes and supporting these businesses will help increase the supply of goods to meet customer satisfaction.

Lastly, the government should intervene and provide funds to help grow local industries that will help them produce high-quality goods that meet international standards. That way, we can meet customer demand due to high-quality goods at an affordable price, create employment and enhance international trade where the government can earn revenue.

References

Department of Labor. Grants InformationRetrieved from https://www.dol.gov/general/grants/howto

Khasawneh, M. Q. (2016). The Impact of Federal Fund Rate in USA Movements on Lending Rates and Consumer Price Index in Jordan. Journal of Eastern European and Central Asian Research (JEECAR), 3(1), 11-11.

Lapavitsas, C., & Mendieta-Munoz, I. (2018). Financialization at a Watershed in the USA. Competition & Change, 22(5), 488-508.

Tarver, E.(2019). Marginal Benefit vs. Marginal Cost: What's the Difference? Retrieved from https://www.investopedia.com/ask/answers/051815/what-difference-between-marginal-benefit-and-marginal-cost.asp