Wednesday, April 1, 2009

Starting a business after being laid off


Unfortunately, but all too common given our current economy, I have recently been consulting with a number of people who have been laid off from their jobs, and are now considering opening thier own business. Their stories are crushing.

Yet, I must caution - even in the face of real need and difficulty - not to jump from one bad situation into another. Need cannot in and of itself be the business.

In one case, an engineer was considering cashing in his 401K to open a franchise. He had been provided three franchise opportunities by a 'consultant' brought in by the outplacement service his previous employer gave him as a severance account. The franchise he wanted was clearly a terrible fit for him, yet he plaintively argued he had to do something to feed his family.

Stories on the internet or in entrepreneurial magazines about people who have successfully made the transition from laid-off to entrepreneur seem always to circle on people such as a marketing executive who did culinary arts cooking previously, now opened a successful bakery. Or the engineer who had tinkered with some software at home, now writing Itunes applications.

There are opportunities out there that can be taken, and within a short time. But no amount of immediate need can overcome the need to know your market, have a product that solves a problem, and priced accordingly.

Use the library (free) or come by your local business development office or incubator (usually free) and get yourself a plan of action first. Then make a firm decision.

This also will allow you to avoid having the weight of your previous layoff overhang your new business. If every time you go into an account with your new business, you predicate your pitch with "I was laid off from ABC, and now am selling X" - people will be sympathetic, but not buyers.

By being organized and ready, rather than just needy, you send a great message to new customers and will allow you to move into the ranks of new business owners.

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