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Starting a business after a job loss makes more sense than it might seem to at first look. But it takes preparation & work – on your finances, on understanding your existing skills, and on a thorough business plan.
Losing your job is one of the most stressful events in life. Whether you were fired, laid off, left for addiction recovery, or left because you were extremely unhappy, you may feel panic, hopelessness, and fear when you lose that tie to your normal, everyday life. But if you’ve ever thought about starting your own business, it can be a blessing in disguise. Losing your job can give you the kick you need to move ahead with your own small business. Before, it was “never the right time” or “things are too stable to mess that up.” Now, those excuses don’t apply. Now it is the time to set out on your own.
Get a handle on your current finances
If you’ve left your job, you’ll likely be left without a steady stream of new income. Before you begin to think about starting a new business, you need to take stock of your financial situation so you can figure out things like your optimal business timeline and how much money you can put into opening the new business.
Calculate living expenses for you and your family, and see how much you need to take from savings. While developing your new business plan, you will want to look into receiving unemployment benefits – which you can get in most states for some job loss situations including layoffs
Put your existing skills to work
Your many years at your previous job should not be looked at as wasted time. In fact, you should look at that time as a long skill-building exercise that set you up to be successful on your own. It’s important to think about your new business as a continuation of your professional skills.
“Ask yourself: What are you already good at? What do you already love to do? What have you already been getting paid to do? How can you adapt your skills and talents – the things you loved best about your old job – into a new line of work?” says Kabbage.com.
If you worked as a programmer for a company, for instance, why not think about developing apps for corporate clients? If you worked in HR, maybe think about a business offering hiring and restructuring services for other businesses.
One of the best ways to put your current skills to work is to start a consulting business. Not only do you already have the expertise to begin such a business immediately, but the cost of running a consulting business is very low compared to other types of small businesses. As you work on getting this business off the ground, you can do some freelance contract work for other companies.
Sit down and write out a full business plan
You may think that you have it all figured out and you may be anxious to dive right in following a job loss, but it’s vital that you take the time to construct a detailed business plan before you do anything else.
According to Investopedia, the plan should include “a mission statement, executive summary, product or service offerings, target market, marketing plan, industry and competitive analysis, Pro-forma financials, resumes for the company’s principals, your offering, and an appendix with any other pertinent information.”
It’s difficult to start up a new business if you don’t have clear ideas about the whys, whens, and hows of the situation. Don’t make the mistake of going into it blindly because you’re itching to get your career moving in the right direction. Take your time and plan.
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