Starting a Business After You’ve Been Laid Off

Were you laid off from your job and now you want to start a business? How should you proceed? This guide will help you get started.

Being let go from your job can be tough. After all, most of us put an immense amount of pride and effort into our work, and being laid off for any reason is painful. It’s particularly distressing when the economy is down, or the industry you work in has suffered a set back. Searching for a new job can be a very long, frustrating process. If job prospects look bleak, or if you weren’t fulfilled working for other people, it may be time to consider using  your skill sets to start your own business.

What Type of Business Should You Start?

If you’re going to go into business for yourself, the first thing you’ll want to do is consider is what is the best business startup idea for you.  In general, most people decide to leverage their existing skills and experience to create a consulting or freelancing business that is closely tied to their old career. For example, if your previous job was in marketing or IT, you can build a business around providing those services on an individualized basis. Typically, this approach is the easiest way to go about starting a company.

Alternatively, you may want to use your recent unemployment as an opportunity to start a business in an entirely unrelated field. On the one hand, this path presents more challenges. On the other hand, motivation is a necessary ingredient in starting any new business, and losing your job can incite unprecedented levels of motivation and productivity. If you feel like being laid off was the wake-up call you needed to start following your dreams, then use that motivation to start a totally new endeavor.

Regardless of what type of company you create, just remember that passion will only get you so far. Ultimately, if your new enterprise is going to be successful, it needs to provide a good or service that is valuable. Don’t just follow your heart. Be strategic and carefully consider all of your options when starting a company.

How Do You Get Your Business Off the Ground?

Once you’ve decided on the type of business you want to start, the next step is to learn how to start a business. In the US, you can get free one-on-one help from Small Business Development Centers and SCORE chapters located throughout the county. Additionally, the U.S. Small Business Administration provides a number of tools for emerging entrepreneurs, including tips for starting and managing your company as well as information about applying for loans and grants to serve as seed money.

Also, early on you’ll need to make a business startup checklist that includes the items you need and tasks you’ll need to complete to launch the business. This list will include entries such as a computer, supplies, deciding on the office location, getting a business phone line, registering your business name, and many other essentials including setting up a website and social media accounts. 

Most of the other major questions you’ll need to answer involve finances. From a practical perspective, you’ll need to make sure that you have enough money to start a company. In addition to the initial startup costs, it takes a little bit of time for many small businesses to become profitable. By going into business for yourself, you and your family will need to accept the fact that there might be some lean days in the immediate future.

Before getting too far down the road on your new business, you’ll definitely want to talk to an accountant. Not only will a CPA help you to better understand the financial ins and outs of the business you’re about to start, but he or she can also provide invaluable advice about the taxes that will eventually arise from your new endeavor. Additionally, it’s wise to invest in small business accounting software. For many startup service businesses and freelancers,  inexpensive accounting and invoicing software such as Freshbooks work well. Other types of startups may find software like QuickBooks  better meet their needs. Or, if you’re watching your budget, Wave, which offers many basic functions for free.

In the process of starting a business and need assistance? Thankfully there are more resources now than ever before for new entrepreneurs. Platforms like ZenBusiness or Northwest can help get your business off the ground while saving time and money.

What if Your Business Fails?

If you’re going to start a business, you need to go in with your eyes wide open. The fact of the matter is that most small businesses fail, but even if your new company never turns a profit, it can help your career in the long run. After going into business for themselves, many workers re-enter the traditional corporate world with a new set of skill that are highly desired by employers. By running your own company, you’re gaining invaluable experience in marketing, sales, finance, and management, all of which can translate into necessary skills in virtually any business setting.

In fact, many entrepreneurs create their companies with the knowledge that they will only be temporary. If you know that your job search is going to take six months or a year, what better way to cover that employment gap than by starting your own business? While some hiring managers may look down on the six months or so you spent succeed as a freelancer, others will respect the hard work and ingenuity it took to run your own company. Also, explaining your freelancing or consulting business is much easier than explaining a glaring gap in your work history.

Starting a new business under any circumstances isn’t easy, and the aftermath of being laid off can be a particularly trying time. However, if you have the motivation and financial stability, creating your own business, even on a temporary basis, can be beneficial. Plus, in the event that your new enterprise is wildly successful, you can work for yourself indefinitely and never have to worry about getting laid off again.