If you have been laid off, you have joined the ranks of millions of unemployed Americans directly affected by this recession. With so few jobs available, many people are launching their own small businesses despite the recession.
If you’re starting your own business, consider the following tips as you transition from unemployment to self-employment:
A home-based business, as compared to one requiring the leasing of a small office, will minimize both your initial capital outlay and your ongoing monthly expenses.
Consider freelancing within your field of expertise. An ideal first client, assuming you were downsized and left on positive terms, could be your former employer.
Determine if you qualify for a small business loan. Another source of start-up monies could be a percentage of your severance package.
If you are collecting unemployment and live in Delaware, Maine, New Jersey, New York, Oregon or Pennsylvania, you can qualify for the federal Self-Employment Assistance Program, which was designed to encourage dislocated unemployed workers to create their own jobs by starting small businesses.
Consult with sources such as Business Advisor and Counselor Inc., SCORE or the U.S. Small Business Administration to determine, for example, what type business structure (for example, an LLC or sole proprietorship) might be best.
Starting a small business requires that you comply with numerous state and federal regulations. You may need to register your business with county or state agencies.
Also, you may need to establish an employer identification number and deal with sales tax licensing, insurance, accounting and zoning permits, among others. Even a modest cash-intensive start-up will require some initial capital outlay.
If you work as an independent contractor, your clients will not deduct, for example, federal income taxes or social security payments. Being disciplined with setting aside money for Uncle Sam is critical in this case.
You’ll have the opportunity to name and market your business. Keep your business’s moniker simple and direct. If it’s catchy, that’s even better.
Creating a blog, which can be done for no charge, is a fine way to start branding your business. Later, after you have generated some income and see that the business offers some long-term possibilities, you can hire a company to create a website.
Stay positive. Remember that there are millions of others like you, folks who have lost their jobs through no fault of their own. Sometimes referred to as “rebounders,” these Americans can serve as both motivation and — to an extent — competition as you start your small business.
Unemployment does not need to create stress and uncertainty. In fact, a loss of work could actually open doors to opportunities such as a career change or your return to school to learn new workplace skills.
Most importantly, being laid off might be exactly what is needed to spur you to take on the challenge of something you’ve always considered: starting a small business.