If you've ever been laid off from a job, then you know what a huge disappointment it is.
I know, because I've been there (a few times, actually). And at one point, I'd had enough of being disappointed, for whatever reason it was — not being "the right fit," budget cuts, restructuring, etc.
Finally, I decided to be my own boss.
At first, becoming self-employed wasn't something I was particularly excited about. With my being laid off and with the market the way it was at the time, I knew my most stable option was to work for myself, despite the risks. I decided to view the situation as an opportunity. The people I knew who worked for themselves always seemed to be more invested in their daily work. Despite it not always being easy, they certainly seemed happy to be steering their own ship.
If you're thinking of becoming self-employed, read on to learn more about how to approach the decision and set yourself up for success.
As I mentioned above, being let go is anything but a fun experience, no matter how it happens. Even in the most respectful of circumstances, your ego takes a hit. And how could it not? Here in the United States, the majority of people spend at least one-third of their lives working. Who wouldn't get invested when it comes to that much of a commitment?
The first thing to do in the aftermath of a layoff is to take some time to reflect. Maybe this means reflecting on the job you recently left or on other roles you've had in your career. You can even get creative and think about your strengths outside the workplace that could be transferable to owning a business. For example, do you excel at building relationships? Or perhaps you tend to get creative when solving problems.
Take some time to unwind mentally and gather your thoughts. Write them down so you have the chance to process them. For me, this is where things got to be more exciting. I realized that regardless of how being laid off made me feel at the time, I had skills that would be valuable to any business (including my own).
Try to focus on the positives of the role that you can carry forward with you:
Now that you've taken some time to assess your strengths, it's time to decide what you'll do as a self-employed entrepreneur. Will you continue what you were doing at a company before, this time as a one-person show? Or will you branch out to do something a little different, given your skillset?
This can be a daunting task, but try to make it fun. Remember — you're thinking of what you're already good at! I recommend you refer to the list you made upon the reflection mentioned above. What are your primary strengths and how can you begin thinking of them as a service you can offer to others (or maybe your strength is making a product of sorts)?
When you have a product or service in mind, you'll want to ask yourself a set of questions to help you prepare. You'll want to know which tax structure to use, how much money you may need to get started, how to protect yourself, and more. Document your thoughts when exploring these questions.
Once you decide on the "what" you'll be doing, you'll need to make a business plan.
We know that not everyone is a bonafide business-person — I'm certainly not. But going into my business, I strategized as to how it would all work out.
If you don't know how to write a business plan, don't stress too much about it. There are a lot of online resources available that will walk you through drafting a plan. The Small Business Association (SBA) lays out an approach to writing your business plan. We also provide a FREE template here to get you started.
While creating the business plan, you may discover that you want to explore some new skills you don't have under your belt yet. Score, an SBA partner, has a helpful resource hub where you can learn more about managing your cash flow and other important skills you'll need to monitor the health of your new venture. You also may refer to other tools and apps we make available while building your business.
Speaking of cash flow, we won't skirt around the issue of money. When starting a new business, one of your obvious goals is to make money. During a time of economic hardship, how do you achieve the most foundational goal of any business, which is to bring in revenue and pay your bills?
I'm not going to lie, this was the hardest part for me to figure out about my own business. I'm no math whiz, and I didn't know how long it would take me to ramp up projects with my client load. How much did I need to cover my basic bills? And how much more would I need to consider one month a success? Could I keep up a specific pace and workload each month? How many projects were reasonable to take on at once?
It was overwhelming at first, but I took it one question at a time.
Remember to keep track of your spending, even while you're getting started. When next year’s tax season rolls around, you could find that you're due for some tax breaks, depending on your purchases.
In reality, I wasn't able to go full time on my own for the first couple of months and also pay all my bills, so I took a contract role for a short time. You may find after doing the math, that you also need help kick-starting your business. Of course, there also is a variety of loans available via organizations like the SBA, which can help you find a financing option that's right for you, whether that means loans, bonds, grants, or something else.
Sure, you're just getting started, but that's a big enough risk in itself, isn't it? Making sure that you have self-employed business insurance is one way to give yourself security while walking into the unknown of being a business founder. In case a customer were to sue you, insurance could protect your personal finances from being depleted by the claim.
Plus, depending on what you do, you may be required to have business insurance or a specialized license in order to operate your business. If you decide to run a business where you need to rent a space or have protection for a home office space, this is another instance where business insurance could come in handy.
Once you have your game plan in order and understand your earnings goal, it's time to get things rolling. And to be in business, you'll need a business owner's most important asset — customers. Begin spreading the word by telling friends and family members about your new business. Especially in a world where a lot of interaction happens virtually, it will be important for your customers to be able to find your product or services online.
Set up social media accounts for your business and a website, even if it's basic. If you don't have a background in marketing, don't worry. The real expertise your customers are coming to you for is what you built your business around.
But you'll still have to sell it. You can learn about marketing and other valuable business skills using free or low-cost resources online. Here are some places you can look:
In the end, being laid off can momentarily impact your self-esteem. But remember, that role was one job, and you have the potential to build a career by becoming self-employed. Give yourself time to reflect on what went well and take one step at a time toward becoming a business owner.
I’ve told stories since I learned to talk and written since I could hold a pen. As a small business owner myself - I'm a freelance writer and yoga teacher - I love contributing to the entrepreneurship community in different ways (including writing for Simply Business!). When I’m not drafting articles for SB, I can be found on my yoga mat, perusing an indie bookstore, and writing (with my cat nearby of course).
*Harborway Insurance policies are underwritten by Spinnaker Insurance Company and reinsured by Munich Re, an A+ (Superior) rated reinsurance carrier by A.M. Best. Harborway Insurance is a trade name of Simply Business, Inc., which is a licensed insurance producer in all 50 states and the District of Columbia.