Question

We discussed how unemployed individuals are more likely to become self-employed later on. How does it affect the performance of the new firm? Why do you think that is?

Answer 1

When unemployed person becomes self-employed and starts a new firm, then performance of the new firm is positively affected as it is run by the entrepreneur as self employed person who is skilled in technical as well as functional aspects of running the firm. Further, Entrepreneur self employed person will have a unique idea to develop a business model and it can create demand for the firm's products. So, there is a fair chance of the growth of the firm.

I think that it will happen, because innovative ideas of the self employed person, will develop business model, and it can be initially financed by angel investors or agencies who provide seed capital to the small and medium enterprises. Here, the entrepreneur has to bring the some part of initial capital required to convince the angel investors or later on banks with suitable business plan. It will help the person to organize some capital and run the firm with high promise of the good performance in near future.