1 in 10 unemployed workers plan to start their own business. Should you?

A mechanic working on a motorcycle in an auto shop.

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It is a way that has its advantages and disadvantages.

Main points

  • Starting a business can be very rewarding.
  • It can be extremely challenging both financially and logistically.

Today’s job market is very different from the job market two years ago. In the year In 2020, unemployment was rampant as everyone struggled to cope with the pandemic. But this year, there are so many jobs, so many companies are desperate to hire.

This does not mean that workers are not victims of layoffs. Even in a strong economy, companies may make decisions to reduce staffing levels if they want to conserve cash. And with recession warnings hitting the news, many companies may soon start reassessing their workforce needs — and making changes accordingly.

If you’ve been laid off, or worried about being laid off, you may be considering starting your own business. A recent Digital.com study found that by 2022, 10% of laid-off workers plan to start a business instead of returning to the workforce as an employee of another company.

But is that path worth exploring? Here are the pros and cons to consider.

How to start your own business

When you own a business, you can call the shots, and you don’t have to report to anyone (like an abusive boss who makes your life miserable). Also, the more time and effort you put into your business, the more financial benefits you can enjoy.

In addition, starting your own business gives you the opportunity to do work that is truly meaningful. Let’s say you’re good at marketing, but you end up spending a lot of your time trying to sell products you don’t care about. You may decide to open a marketing firm that partners with charities and non-profit organizations to help them grow. And that’s a job you can feel really good about.

Disadvantages of starting your own business

While there is much to be gained from starting a business, you should know that it can be all-consuming, especially in the beginning. You may find yourself overwhelmed with the number of tasks you have to manage and complete. This is true even if you can hire some employees early.

In fact, the biggest reason many people quit their jobs last year was to find a better work-life balance. But if you start a business, you may suffer in this regard, especially in your first year or two.

Then there is the financial aspect. A new business can take a long time to make a profit. And that can put a lot of stress on your plate.

That said, you can reduce that stress by building up your savings before starting a business. That way, you can focus on getting your business off the ground without spending time constantly rebuilding your family budget.

Is starting a business the right move for you?

If you’ve been laid off, you may be considering starting a business instead of job hunting. The same can be true even if you are doing well but are looking for a change.

Running your own business can be a truly rewarding endeavor. Before going this route, make sure you’re up to the challenge, and know that you’ll need to sweat it out for a few years to enjoy the long-term benefits.

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