You know the numbers

According to the Bureau of Labor Statistics in FEBRUARY 2009 Nonfarm payroll employment continued to fall sharply in February (-651,000), and the unemployment rate rose from 7.6 to 8.1 percent. In February, job losses were large and widespread across nearly all major industry sectors.

The unemployment rate continued to trend upward in February for adult men (8.1 percent), adult women (6.7 percent). The number of long-term unemployed (those jobless for 27 weeks or more) increased by 270,000 to 2.9 million in February. Over the past 12 months, the number of long-term unemployed was up by 1.6 million.

The fear now is that the pace of job losses is only gathering further speed as employers move to slash costs to cope with falling demand. .

Noting that 1.9 million jobs have been lost since the start of the recession a year ago — two-thirds of them since September — President-elect Barack Obama invoked public spending as the best way to get a dead-in-the-water economy moving again. “This painful crisis,” he said in a statement, is an opportunity “to improve the lives of ordinary people by rebuilding roads and modernizing schools for our children,” and by investing in clean energy projects.

A goal of all this spending is to generate 2.5 million jobs over the next two years, he said, repeating an earlier pledge. Given the accelerating job losses, hitting that target would barely recover the jobs that have disappeared over the last year.

What does this mean for you?

So you may have been among these poor people already laid off, or maybe you are worried you are next?

The big question is what to do now…and maybe you are thinking should I strike out on my own because you have few other options or because you think this would be better than “risking it” at your current job?

In either case, don’t just leap into this type of decision because you feel you need too, even when you desperately need a job just starting up your own thing maybe totally the wrong choice!

Clearly, starting your own business after being laid-off is a major undertaking, particularly when the economy is depressed. It could be months, or even years, until you can develop a sustainable income stream.

Hire yourself…or not?

OK let’s examine the question then, what about starting a company from scratch?

If history is any guide, a significant number of people who are laid off over the coming year will do just that. Carl Schramm, the head of the Kauffman Foundation, a non-profit organization that promotes entrepreneurial activity, points out that start-ups tend to flourish in the year that follows a sharp downturn. Rather than head back to another corporate bureaucracy, some of those made redundant will take a shot at being their own boss.

So there is definitely evidence that you could startup in these testing times, no doubt about it, but you should also be clear that risk is not reduced by these conditions, it’s probably increased for a pure startup – not least because of the lack of easily available capital.

So what about the counter argument, what about just hunkering down and finding a new job, working part-time or re-training for a new profession?

In my view you should consider all the options, you have many more choices than you think and if you take a little time to review all the choices you may find that you don’t have to start a business because you have been laid off.

Why is “thinking” about it important?

Well starting a business is really, really tough for most people and it requires not only skills, but serious commitment of time and money usually. There are many exceptions to this of course, but in general it involves all of the above. So you have just been handed your last pay check for a while and you have some savings and you now want to risk all of that on starting up? This is dangerous in one key aspect – the rebound effect – like you have just lost your great love as a kid and then you just jump into the first relationship that comes along..! Did that work out for those that did that in most cases, hell no!! The same applies to just starting a business up on the same premise.

Avoiding the rebound trap

So let’s say you are baring with me here and you think it’s right to stop a while and review your options.

Don’t stop too long and get depressed, this is affirmative action! I wrote a book to help you make the right decision. It’s purpose in this type of situation is to help you “write down” all your options and to mentor you through the thought process about becoming an entrepreneur!

The free entrepreneurship workbooks you can get from my site “So you want to be an entrepreneur” alone will help you avoid the trap of just jumping into something and following my own silly mistakes of starting a business with a “fire, ready, aim” approach.

As an entrepreneur, you’ll have to become a jack-of-all-trades with responsibility for marketing, hiring, bookkeeping and a thousand other tasks. You’ll lose (at least for a while) the perks of scheduled vacations, company-paid benefits and consistent paychecks. Have you thought about all that?

What about your partner, kids or family…what will this change mean to them, have you discussed that and do you have their support?

Of course, if you have a great idea, favorable market conditions, and can run a tight ship, you may never again have to face unemployment again…

Can you “start-up” if you decide too – Yes!

Don’t let me hold you back, if you have the passion and the ability to can definitely start right now and have a number of advantages that a recession brings like less competition and the ability to negotiate much lower costs for your business.

Indeed, as I have shown it’s a great time to start BUT only if you have the “right stuff” to do so – the same as any time – recession or not.

Paul Graham who has seen a great deal of startups says this:

If we’ve learned one thing from funding so many startups, it’s that they succeed or fail based on the qualities of the founders. The economy has some effect, certainly, but as a predictor of success it’s rounding error compared to the founders.
Which means that what matters is who you are, not when you do it. If you’re the right sort of person, you’ll win even in a bad economy. And if you’re not, a good economy won’t save you. Someone who thinks "I better not start a startup now, because the economy is so bad" is making the same mistake as the people who thought during the Bubble "all I have to do is start a startup, and I’ll be rich."

So in summary, by all means go for a startup now or anytime but do do the groundwork on yourself first – work out if you would make a good entrepreneur or not. Then go on to find another job or get started BUT don’t just jump in and risk your life savings just because you have been laid off.

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