Yesterday afternoon I was interviewed by a franchise related magazine and was asked my opinion on why so many people were starting businesses now since being let go from their regular work.
I was also asked what advice I would give to a new entrepreneur in these tough economic times. I thought I would share my thoughts with you as well.
Why are so many people starting businesses now after being let go from work?
1. Control Your Own Destiny.
When you work for someone else you don’t have control over your destiny. You’re always tied to the success of the organization and when the company has problems you could be let go for no fault of your own. When you run your own business you make the decisions and your hard work is in return rewarded with profits.
2. Young Workers Want Opportunity.
Many of today’s young workers were hired during the boom times and haven’t seen an economic recession. Now they are realizing that life isn’t always so great working at a big company. They know they are still young and are using the chance to start off in a new area by doing their own business. If not now then when?
3. Necessity Is The Mother of Invention.
Many people cannot find work anywhere else so they start their own business more out of a necessity to survive than out of a desire to be an entrepreneur. There is nothing so powerful as the need to put food on the table when your back is up against the wall.
What top 2 tips would you give to new entrepreneurs starting out?
1. Build Around A Customer.
Find someone to buy what you are selling and get the cash coming in right away. Do not waste time thinking and planning endlessly. Find a problem and solve it. Many people have found that their old employer is actually a good potential customer if you can solve their critical needs.
2. Do Not Spend Until You Earn.
Especially if you have been let go from work, you do not want to get into anything that will require a large capital outlay. Find ways to get profitable and start filing up your bank account. This may mean starting with a service where you are trading your time for money and eventually moving into a product based company once you have the capital to expand.
Why do you think people are rushing to start new businesses? What advice would you give them?
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Evan – some great advice that focuses on the “bootstrap” model. Too many entrepreneurs are looking for funding before their idea has been proven in the marketplace. By building around a first client, you show that you are creating real value for someone. I like to think that an individual customer is actually a proxy for a whole range of other clients you just haven’t found yet.
I also encourage entrepreneurs to really understand their personal sweet spot. I have a blog post that outlines how to find your sweet spot, based on Jim Collin’s Good to Great and the Hedgehog Principal. You can check it out at:
http://tinyurl.com/6af7wl
The best protection from a layoff, is to have your own customers.
I encourage everyone to setup a small home business, even before they are laid off, so that when the time comes you don’t have to start from scratch. You will be much better off if you have the foundation of your small business setup and a few customers.
Great post! I most definitely left my corporate job to control my own destiny. I think that desire was sparked in me years ago while in the military, definitely had no control there. Also as a young worker I felt, perhaps arrogantly, that my skillset far exceeding most of the entry level jobs I held. I wanted the opportunity for a bigger challenge and the ability to explore just how strong my skillset is in bringing a concept to market and starting a business. Evan if you have time check out my blog. I’m attempting to detail my journey into entrepreneurship. Any comments or tips would be appreciated.
I forgot to include the url. http://brockpredovich.com
Indeed!
#3 should be #1 since this the blog entry starts with the question “why do people start their own business when they lose their job”…people that start their own business and give up their job to do it are the ones that fit those other categories better…
To elaborate on #3…most people are slaves to the so called 9-5 jobs because they bring that steady weekly paycheck…and they find that as the years roll by their creative juices seem to dry up…nothing like unemployment looming overhead to get those juices flowing again I tell ya!
Excellent insight.You definitely led us to the water. I think that panic is also causing many entrepreneurs to rush and start businesses. Combined with vision and ambition, it was a factor that inspired me to start my business. But it also caused a lot of pressure to succeed because my income was directly tied to the success of my business.
I started a business straight out of college because I have been self-employed all my life and felt that business ownership was the next step. It was during the market downturn of 2003 and I could not find a job anywhere. So ambition mixed with passion set me on the path of entrepreneurship. Over the period of one year, I wrote the vision for my business. When I finally looked around, I saw that many of the pieces were out of order. I had spent money in areas that were not paying off and had neglected the needs of my customer base. Panic threw off my internal clock. It threw off my timing and as a result, I tried to rush the development of my business.
When it comes to building business, timing is everything. I would encourage a fellow entrepreneur to take your time and consider the timing of your decisions. As the saying goes, “Rome wasn’t built in a day”. Building an organization and building business (they are two different processes) take time.
Great advice, I visit your site often to get ideas. I’m 23 and I juststarted tutoring in the evenings again since last mth…it’s not alot of money but the little extra does come in handy when i want little things! My day job is ok but the pay isnt the best.
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The comments here are no follow bummer.
Thank you so much for this blog! I am very excited about the info. that was shared. I have always had the desire to create my own business. I know that I am going to have my own business where I will not have to work a “day job” also to help support my family! I am an artist. I believe that I can use my talents in some way to generate income and live my dreams! Thanks LT
Many people go thru life never knowing, often dreaming, but never quite sure if owning their own business would have been a better life decision for themselves than their current position of employee. I have heard many business owners exclaim: Getting fired from my job was the best thing that ever happened to me!
No, I am not advocating getting fired, but everyone during their lifetime should at least consider, if only on a part-time basis at first if possible, taking the plunge into the scary but possibly incredibly rewarding world of owning their own business.
Why do I think NOW is the time to take the plunge; or at least sit down and rethink your present career choice?
1) The cost to obtain start-up money is still relatively cheap – interest rates are historically low.
2) SBA loans for sound new business ventures are there for the asking. The government realizes that small business growth is a key factor in economic growth.
3) Working for others is becoming less & less secure, given the present day merger-mania business atmosphere with big firms just getting bigger and the alarming number of under-funded pension funds in big corporate America.
4) Pay raises and commission – based job structures just keep getting leaner.
5) Company paid benefits are becoming fewer in dollars & number, and are being less paid percentage-wise by the company.
6) Employee uneasiness and unhappiness rates are rising rapidly as large big corporate lay off announcements are sounding more frequently given the nature
of the world competitive marketplace.
7) Consumers, when given the choice, would rather buy or deal with an entrepreneur than with a super big American corporation.
People live longer today, but big corporate America tends to rid themselves of good, experienced, loyal employees when they believe that such employees can be replaced with younger, cheaper, and less expensive benefit cost employees.
Not all of us are cut out for self-employment. I have talked many people out of self-employment. Yes, there is much less security – no real steady paycheck each week Some people just don’t have the mental toughness and willingness to make the sacrifices that self-employment demands. But the rewards – independence and the true ability to determine your own destiny – seem to far outweigh the alternative work routine.
The key to self-employment success is quite simple:
You must have a well-thought out plan that demonstrates to you that the world really needs your product or service NOW; and the world must want to pay for your product or service at a price that allows you to live the lifestyle that you desire.