The coronavirus pandemic has caused large-scale economic disruption and loss of life around the world. It is devastating that several thousands of people have lost their livelihood in the ensuing crisis.
We do not know what shape the economy will take once this is over. However, it may be safe to say that things will be quite different on the other side.
If you are starting a business soon, then you need to know about how the current economic scenario will affect your business. A recession can offer certain advantages to a business that a boom does not, and being in a recession may play out to your benefit.
Another factor that may help you if you’re planning on starting a new business is the implementation of the Goods and Services Tax (GST) in India. The purpose behind the GST is to simplify the indirect tax laws of our country and make it easier to conduct business in the country.
Take a look at some factors that you need to consider while starting a business in these unprecedented times.
Start-ups and Small Businesses Do Not Have to Pay GST
Before the GST was implemented, any business that crossed a turnover of Rs. Five lakhs every year had to get themselves registered and pay the Value Added Tax (VAT). Some states were more lenient and required businesses to register themselves if their annual turnover crossed Rs. Ten lakhs.
Now that the GST has been implemented, only businesses and start-ups that have crossed an annual turnover of more than Rs. 10 lakhs need to get themselves registered. Only businesses and start-ups that registered under the GST need to collect GST and pay taxes at the given rate.
Hence, due to the new GST laws and rules, businesses and start-ups are exempt from paying GST as long as they have not crossed the given turnover volume. This move has made it much easier for businesses that are just starting to get off the ground.
Businesses Do Not Have to Pay Both VAT and Service Tax
Before the GST was implemented, any company that sold both goods and services as a package had to pay two kinds of tax. Such companies had to pay VAT because they were selling goods and they had to pay service tax because they were also selling a service. These types of businesses include restaurants and IT services that sold both goods and services.
Complying with both VAT and Service Tax laws can be cumbersome, and it used to increase the prices for the end-consumer. However, with the implementation of the Goods and Services Tax, the distinction between goods and services has been done away with. Now such businesses only need to comply with a single set of tax laws.
Gear Yourself to Survive the Downturn
If you start a business during a recession, your main goal should be to survive. You need to put the necessary financial constraints on your business that ensures longevity.
Prioritising longevity over survival is one of the essential methods to ensure that your business is successful in the long run. It is easy for businesses to collapse during a recession, so making sure your business has enough capital to survive is a job well done.
Instead of raising money from institutional investors, you should try to start a business that can be self-funded, or can be run on money secured from friends and family, or is capable of generating enough revenue to fund itself.
Even though this may slow your growth, your business will be well poised to grow once the economy starts to expand. It can be challenging to secure funding from an institutional investor during such times since their limited resources will go towards a smaller number of companies.
You Will Learn A Lot
Starting and running a business during a chaotic time is harder for obvious reasons. It is more difficult to predict consumer behaviour, or make business plans, or find resources to support your business.
However, even if you fail at a business or make a few mistakes, you will stand to learn a lot from your experiences. Successful entrepreneurs are made of sturdy stuff, and they have seen their fair share of failures.
Failing at things that you try your hand at does not make you a failure. Instead, you are only a failure if you do not learn from your failures or if you let your mistakes get you down.
So, do not be afraid if your business does not go exactly as planned. Your experience will be an excellent first step and will help you with your future endeavours.
You do not learn as much from being successful as you learn from your failure. Success may come as a result of a sudden change in the market or other factors outside your control. This will not prepare you for harder times, and you may have to face the consequences when the inevitable change in the market happens.
You May Find Loyal Team Members
Keeping a business running during tough times will require more hard work and more perseverance. It will also require you to work very closely with your team members and co-operate in a way that you might never have done before.
The adversity that you face will inevitably bring your team members closer together, and you will value your shared experience.
The more adversity that you face, the more valuable will be your experience. You and your team members will be more loyal to each other as a result. Once your business starts to pick up and expand, you will have a loyal team that always has your back.
An excellent and cohesive management team is the key to any successful business operation, and you are more likely to find one during times like these. You are also less likely to lose these team members because of the hard times that you have been through with them and the loyalty that you have inculcated.
The implementation of GST has made it easier to do business in India, and the spread of the coronavirus may prove to be an opportunity for certain types of businesses. If you want to start a business now, make sure that you know about the gst threshold limit and the gst council members.