StartupTalky

Tag: debt

  • Shell against Recession – 11 Ways to make your Startup or Business Recession Proof

    Making one’s startup recession-proof is not a quick switching activity. It is a process. Ignoring it on regular days isn’t the ideal way. During the downturn of the economy, it might be too late to control or even preserve the existence of the business.

    This ‘R’ word is always a nightmare to business owners be it big or small. However, if the mechanism against recession is designed wisely, a business can be running smoothly, whatsoever the conditions might be.

    Here’s the enchiridion to a recession-proof startup. Hard work counts along with a witty application of needed aids. Here’s the one-stop solution to make your startup recession-proof at any time and every time.

    Cut off unnecessary expenses
    Find Costless ways of advertising
    Buy Old or Rent Furniture for Office
    Clear off your Debts on Time
    Build a loyal Customer base
    Have a Clear objective
    Make/Build Durable products
    Don’t add/purchase extra or unnecessary products and services
    Invest wisely in adaptable technology
    Hire a Financial Planner
    Development Should be your Priority
    FAQ

    Cut off unnecessary expenses

    Cutting off unnecessary expenses is always a plus for businesses. Look for ways to reduce the round expenses along with operational costs. New product launching should be held back for favourable situations only. Unless needed urgently, new employment shouldn’t be entertained.

    Investing in new products, for “experimenting” is not a positive aspect while making your startup recession-proof. To enable the smooth running of a business even during a recession period, cost controlling, is very important.

    Find Costless ways of advertising

    Cheap or costless ways of advertising is again a savings-friendly method. Guerilla marketing is one of such techniques which is cost-beneficial yet effective. For example, If an ice cream shop opens in town, they give free ice creams to their first ten buyers for the first week. This doesn’t hamper their profit much as there will be way more customers than usual in order to be one of the first ten. However, there are more ways to advertise without sinking a penny.

    Buy Old or Rent Furniture for Office

    Run-on tight budget in the beginning. Buying old furniture and decors for office, hiring only the necessary number of employees is to start with.

    Clear off your Debts on Time

    Clearing off debts on time is one of the very significant factors, affecting the cost management of a business. Avoid opting for high payoff debts in the first place. Such debts slow down the ability of the service of the startup to meet the debt itself. Debts should be paid off immediately or they should be lesser in the count and lower in amount.

    Staying in good communication with investors and stakeholders are very important too. The business or any operation that is not running in profit should be sold.

    Learn How to Avoid Bankruptcy | How to Manage your Budget
    Struggling to manage your budget during your early days of startup? Check out this post to avoid bankruptcy.
    StartupTalkyParnas Ghosh

    Build a loyal Customer base

    Build a Goodwill in the existing customer base. Invest in bigger and regular clients than investing in matters to attract new customers. Allow discounts to regular best customers. When they will receive the best experience and end results from you, they will be interested to work along with more and will be a source of advertisement to attract new customers.

    Have a Clear objective

    Having a clear objective is very important to build your business recession-proof. You either focus on cost leadership or quality differentiation. You choose anyone and don’t hang in the middle. This will enable you to hold on to your customers even while there’s an economic recession. This displays and retains loyalty.

    Especially for smaller startups, there’s no need of being everything at once. Find your specialization and master it to thrive in even the worst market situation. This is because if you build a good customer base, you’ll still have your business running because of them even during the economic downfall.

    Make/Build Durable products

    Startups should focus on necessity, durability and eligibility. Since startups are replicable businesses, they aspire more to follow them. They should be durable, and day to day usable. To make sure even during the recession period of economy, your product should have its demand intact. The products should be durable too otherwise they cannot gain customer’s confidence.

    Don’t add/purchase extra or unnecessary products and services

    Diversification is not the right way. Adding extra products and services to your offering doesn’t make it any different. It just increases the wastage of money simply. Startups must promote unique and different products not unique and different products’ additionals. Begin with a useful and unique product in the first place.

    Invest wisely in adaptable technology

    A wise investment in adaptable technology saves a lot of hard work and unnecessary expenses. Like an online meeting with a client can easily save a lot of expenditures. If a single machine can replace numerous labourers, it should be put to use immediately. This would save cost when there’s a high demand for labourers and their cost is high, it will hardly bother you!

    Hire a Financial Planner

    Hire a financial planner to track your monetary activity very well. A professional can help you and your business with cash flow, expenses and savings so that your business finance is in your control even during a recession period.

    Development Should be your Priority

    Development should always be your priority. When business is strong, most people leave it loose waiting for instances of downfall. No matter how strong a business is, ways of development should always be monitored. Development designing controls the future prosperity of one’s business. Also when a business is slow, action plans should be implemented to restore the conditions.

    87 Business Ideas with Low Investment and High Profit
    Are you looking for small investment business ideas? Here in this article, we have compiled 87 business ideas with low investment and high returns. Best ROI Business ideas
    StartupTalkyShubham Kumar

    Conclusion

    However, startups can never be made 100% recession-proof. Business is all about ups and downs. Such measures can ensure the survival of a business through hard times of recession and maybe ensure profit-making out of such times to some extent. The startup owners analysis and experience are also the keys to a recession-proof startup.

    FAQ

    What products are recession proof?

    Nutrition products, Home and cleaning essentials, Inexpensive entertainment, Pet care essentials, Food and beverages and baby products are some products which are recession proof.

    What is the best recession proof business?

    The food and beverage industry is one of the most recession proof industries due to the fact that everyone still needs food and drinks to live.

    What companies suffer most in a recession?

    Retail, restaurants, Hotels, Automotive, Oil and gas, Sports, Real estate, and many others Industries see heavy declines during times of recession.

  • A Case Study on America’s Rising Debt and its GDP

    The debt of the United States is the national debt that is controlled and acquired by the federal government of the U.S. to the Treasury security holders. According to the report by March 2021, the United States debt crossed over $28 trillion. This came to be so high that this was more than the economic production of the US calculated annually.

    With the history of so many years, US debt has been increased by the slump that lowered the tax revenue. However, the Congress government has spent a lot more than this to facilitate the economy over time.

    Besides, other services such as the Military have proven to be one of the biggest contributors who have been used for the benefits of medical care and others. And with the world pandemic in  2020-21, the spendings on the counterbalance of the situation has added more to the debt. But the good thing is, all this will be resolved once the pandemic ends.

    Till then, other methods such as increasing taxes and a tight budget could help in reducing the debt. And this wide combination of budget growth, tax cutoff and recessions have brought the national debt-to-GDP ratio to a record level. But when there is a problem, to solve it, we have to face some consequences. And so the United States government would have to face the economic consequences.

    In this article, we will discuss a case study on the U.S. debt and its GDP. Let’s get started.

    United States National debt about GDP
    United States Finances
    The ratio of debt to GDP
    United States Debt History
    America’s debt vs GDP
    FAQ

    United States National debt about GDP

    The relation of the gross domestic production (GDP) with the national debt of the US has been rising since 2016. And the estimated data shows this would continue till 2026. The graph from 2016 to 2019 has been pretty high in the projection. By the record of 2019, the United States national debt was estimated to be around 108.19% of the GDP.

    Total Public Debt as Percent of GDP
    Total Public Debt as Percent of GDP

    United States Finances

    The national debt of the United States has had several ups and downs but since the 90s the graph has kept rising. And so as the public debt, which is known as the total money borrowed by the nation to facilitate and cover up the budget deficits. However, the monthly records of debt have been quite stable.

    Even after the recession of 2008, the national debt of the United States has proven to be pretty steady and progressive. And the estimations have shown, it will keep rising in the upcoming years. Although the budget cuts and the lower employment opportunities have hurt the American economy, which is still recovering from such a crisis. Therefore, the national debt of the US, as well as the national debt of US per capita, has quadrupled since the last 1990s.

    Besides the excessive progress, the national debt of the United States is still not counted among the top 10 highest national debt countries with relation to its GDP. However, countries such as Italy, Japan and Greece have far more figures than the US.

    The ratio of debt to GDP

    The Debt-to-GDP ratio of a country is calculated as the ratio between the country’s national debt and its Gross Domestic Production (GDP). This ratio measures the country’s currency and is calculated every year. When the Debt-to-GDP ratio comes low that shows that the country is sufficient enough for producing and selling different goods and services and it does not require any further debt for this purpose.

    Moreover, many other factors such as wars, interest rates and recessions also affect the debt acquiring and borrowing rates and its choice to incur more debt. However, the countries with the high Debt-to-GDP ratio face different crisis and its recovery takes time. The Debt-to-GDP ratio impacts the country’s economic situation.

    Why Experts believe GDP of India will grow by 10% this Financial Year
    The major cities of India have been under lockdown from the month of April andmost of them have increased the lockdown to 31 May 2021 as of now. Even afterthe economic shutdown the Indian business magnate Rakesh Jhunjhunwala hasconveyed positive sentiments towards the Indian economy and stock mar…
    StartupTalkyAlan Joseph

    United States Debt History

    Soon after the revolutionary war of 1790, the united state government initiated its footsteps towards the debt. And after the 1790s, the debt has acted as the major help in times of war or economic recession for the U.S. government over centuries.

    However in the period of deflation which is known for decreasing the debt size. But, actually, the real worth of debt is enhanced during this period. In the deflationary period, the money value is heightened while the access to loads of money becomes tougher.

    According to the record of 2020, estimated by three Congressional Budget Office, the public debt was equal to 98.2% of the GDP. Later, it reached up to 99.4% and 105%. This was the peak of the debt-to-GDP percentage since 1946. In the 1970s, the debt faced several periods, and it stood stable.

    But, from the beginning of the 1980s, the debt rose drastically. This was seen till the early 1990s, When the U.S. was under the presidency of Reagan and Bush. However, the ratio came down to 30.9% in 2001. But under the presidency of George W. Bush, it rose again.

    Later, the U.S. faced several financial crisis and suffered the Great Depression period as well. This brought a major uprise in the debt percentage and during the presidency of Obama, the debt rose to 75.9% of GDP in 2008 and then, in his second term in 2016, it raised 73.3%.

    America’s debt vs GDP

    When a country’s debt is estimated it comes incredibly high. And in a country such as America, the value is quite large. However when the national debt is compared with the annual GDP, then only the financial deficits of a country could be measured.

    The American debt went stable till 2007, but a drastic change was seen during the global financial crisis period. During this time in 2012, the debt rose to 95% of the GDP. After this, the debt kept on rising. And, during the pandemic of 2020 and 2022, the GDP percentage crossed over 100%.

    Reasons Why Indian Economy Grew quicker in 2021 than any other country in the world
    The second wave of the coronavirus pandemic had taken the country by a stormwith major cities going under a lockdown. However, the cases have decreased nowand the cases have been receding in the major cities across India. Despite theCovid outbreak in the country, the Indian economy has been growi…
    StartupTalkyAlan Joseph

    Conclusion

    The United States has faced such an economic situation before also in the 1970s. And, now with the debt of over $27 trillion which includes some mandatory spendings such as health care which requires around $2.7 trillion. The total revenue’s 50% comes from the income taxes of an individual.  

    The pandemic has made things more delicate and tough and until it is completely over, the economic crisis will continue along with the rising debt-to-GDP ratio. Well, in this article, we briefly discussed the American debt and its cooperation with the GDP.

    FAQ

    What is the current debt of United States?

    The current U.S. debt is $23.3 trillions as of 2020.

    Which country has no debt?

    Brunei is one of the countries with the lowest debt. It has a debt to GDP ratio of 2.46 percent among a population of 439,000 people.

    How much is the world in debt 2020?

    The global debt total is at all-time high of $281 trillion by the end of 2020.