Being laid off is one of the most stressful experiences a person can face. It impacts your finances, confidence, and well-being, as worries about the future create anxiety in your mind. However, many individuals choose not to look for another job after being laid off. Instead, they decide to start their own businesses and become entrepreneurs.
Embracing entrepreneurship after a job loss is a courageous step toward self-reliance and professional reinvention.
Read on for a step-by-step guide to starting a business after a layoff.
Take stock in yourself
To thrive in a competitive marketplace, start by reflecting on your strengths, weaknesses, values, and lessons learned from past setbacks.
Evaluate your current skills and identify areas for growth. If necessary, pursue additional training or certifications that can help you stand out in your field.
While anyone can start a business – even without formal qualifications – you must exhibit essential life skills like problem-solving, adaptability, and perseverance. These qualities often make the difference between simply starting a venture and building something successful.
SCORE, a national nonprofit organization that offers mentoring and resources for small businesses, provides a Small Business Readiness Assessment Tool. to assist you in your journey.
Get your finances in order
Before starting a new business, review your financial situation.
Start by negotiating your separation and severance package. Not every package can be negotiated, but it’s worth trying. You might increase your severance pay, lower healthcare costs after the layoff, or extend your termination date.
Talk to your human resources representative about any benefits you may still receive after you leave. Ask if you have any unused vacation days or paid time off that will be included in your final paycheck.
Think about how to replace your lost health insurance. You can join your partner's plan, visit your state's health insurance exchange, enroll in an HMO or PPO, or choose continued coverage through COBRA.
Also, look into applying for unemployment benefits. Some states let you apply for unemployment while receiving severance pay, but others may reduce your benefits or make you ineligible if you have severance pay.
Make a spending plan to understand how much money you need for your bills. List your cash reserves, assets, possible cost-cutting measures, and essentials for survival. If you're worried about paying bills soon, contact your bank and lenders now.
Research the market
To get your business ready, start by understanding your target audience and your competition. Collect data to support your business idea. To help your research efforts, consider the following:
- Determine your industry and find out who your competitors are.
- Identify your target customers. What are their demographics, income levels, location, buying habits, etc. Go deeper by identifying their pain points, challenges, and motivations. What problems do they need solved and how can your business provide the solution? The more you can visualize your target audience, the more effectively you can tailor your marketing, messaging, products, and services to meet their needs.
- Think about the current economy and how it affects your business idea. Look at where consumers are spending their money and where they are cutting back.
Once you complete your market research and understand your ideal client and the viability of your business idea, you will be on the right path.
Create a business plan
Creating a business plan will help you stay on track, provide a common goal for you and your team, outline milestones to measure your progress, and help you gain access to financing. As you check your progress, remember to revise your business plan and financial forecasts as needed.
Optimize your LinkedIn profile
LinkedIn is a valuable tool for entrepreneurs seeking to grow their startup. To make the most of it, use clear keywords that describe what you do. Think about whether you want to be known as a “freelancer,” “CEO,” “founder,” or “consultant.”
Review and improve descriptions of your previous jobs and achievements. Focus on your experience and accomplishments, keeping future goals in mind.
Joining and actively participating in relevant LinkedIn groups can boost your profile views and help you build important professional relationships. By connecting with others and engaging meaningfully, you can create a supportive community that offers guidance, partnerships, and business opportunities.
Get comfortable selling yourself
Your main job as a business owner is to sell and generate revenue for your business. As such, you need to set aside any inhibitions and be ready to network and self-promote.
To help you get comfortable selling yourself, consider the following:
- Know your industry. If you’re not knowledgeable, you will struggle to sell your product or service. You don’t need to know every detail, but you should understand several key aspects of your field and, most importantly, why your customers need your products or services.
- Change how you think about prospecting: Think of it as “building relationships,” “finding people who might need my services,” or “growing my network.” You’re not pushing your idea onto someone; you’re looking for a good match for both sides.
- Start early: Remember, prospecting takes time. It’s normal to have a delay between when you reach out and when you see results. So, always start prospecting before you need new clients.
- Keep some business cards handy. Even in our digital world, traditional business cards are still useful for personal connections and networking. They let you easily share your contact information, which can be especially helpful when technology isn’t available. Add a QR code for convenient and easy access to your LinkedIn profile or website.
Work on your pitch
First impressions matter. We form opinions about people right after meeting them, often in milliseconds, so a compelling elevator pitch is essential for any entrepreneur.
A good elevator pitch grabs attention and encourages the listener to learn more. It also helps guide future actions, such as a follow-up meeting, an introduction to a decision-maker, or a consultation.
Craft your pitch so that both someone with an eighth-grade education and someone with a PhD can understand it. Keeping this in mind increases your chances of being understood by a wide audience.
Think about your setting and audience, too. For instance, you can include more details at a dinner than you would during a formal meeting. Plan for a short pitch (25 words) and a longer one (50 words).
Record yourself on your phone or computer to review your performance. The more you practice your elevator pitch, the more confident you will feel, and the better you will get at presenting it.
Consider forming an LLC
Forming an LLC can protect you from personal liability. This means your personal assets – like your car, house, and savings – are generally safe if your LLC goes bankrupt or faces lawsuits.
Creating an LLC also gives you more flexibility in managing your business. It helps you avoid double taxation, adds credibility to your company, and makes it easier to handle paperwork and keep records.
Make sure to follow your state’s LLC laws to avoid penalties and keep the benefits of having an LLC. Each state has different requirements, but you will usually need to have a registered agent and file an annual report.
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