From Layoffs to Entrepreneurship: Should You Do It?
Everyone is feeling the impact of a shaky American economy right now, especially those impacted by the mass layoffs that have been taking place in the last several months. As a financial advisor and entrepreneur, I’ve seen firsthand how seasons of economic downturn can uproot people’s stability and sense of purpose. I’ve also seen many ambitious individuals take unexpected events as an opportunity for growth and branching out – turning many toward entrepreneurship after being let go.
If you find yourself contemplating embracing self-employment in response to a layoff, you're not alone. Together, we'll explore the risks and benefits associated with taking this leap of faith, and I’ll give you many of the hard-earned lessons I’ve compiled over the years (and wish I had someone to teach me when I was starting out!).
As you weigh your options, it's crucial to assess the economy, your tolerance for risk, and all the pros/cons of the world of entrepreneurship. They include:
The benefits of being self-employed
Autonomy and flexible scheduling
One of the most appealing aspects - setting your own schedule and structure to work on projects that align with your passions and skills.
Diversified income:
Unlike traditional employment, self-employment can allow you to explore various income streams, serving as a safeguard against further economic uncertainty. Even if you’re interested in starting your own business, you can consult on the side, take on freelance gigs, or pick up side hustles along the way.
Personal and professional growth:
Operating your own business can be a catalyst for major personal evolution, as you learn to overcome challenges, network, market yourself, negotiate, and more.
The risks of being self-employed
Financial uncertainty:
Self-employment comes with financial fluctuations, irregular income, and even months where you can’t count on any income at all. Plus, if you’re starting your own brand, you may need to take on business loans or lines of credit with interest attached. Those are long-term financial decisions which must be made carefully.
Lack of security:
Unlike traditional employment with some level of job security, self-employment carries inherent risks, like how market changes can impact your business’s stability. As a restaurateur, I experienced this firsthand during the pandemic. There’s no way to count on being successful.
You’ll also need to weigh the fact that job benefits, such as health insurance, will now be your responsibility. The costs of coverage through the Affordable Care Act often surprise people - be sure to weigh those as you decide.
Responsibility overload:
As an entrepreneur or full-time freelancer, you won’t just wear multiple hats – you’ll wear them all. You’ll be responsible for either DIY-ing or finding (and paying for) help for everything from logistics to accounting, inventory to pitching, investor relations to office cleaning. Juggling all of those tasks requires excellent time management, and sometimes even a personal assistant or scheduling software. Budget your time and your resources appropriately to deal with that load.
I totally understand the desire to embrace self employment after getting laid off. As you weigh your options, consider finding a mentor or a career coach who can help you navigate these new waters. By carefully weighing the risks and benefits, you can make informed decisions that align with your dreams.
Every career journey is unique, and if yours is filled with a few twists, turns, and detours, that’s okay! With the right mindset and careful financial planning, self-employment could be the fulfilling path you've been looking for.
Be sure to subscribe to my newsletter, The Ambitious Amiga, for more advice like this, recommended business grants to apply for, event invites, and more.
