Should You Really Quit Your Day Job in a Down Economy?
Nellie Akalp is CEO of CorpNet.com. Since forming more than 100,000 corporations and LLCs across the U.S, she has built a strong passion to assist small business owners and entrepreneurs in starting and protecting their business the right way. To learn more about Nellie and see how she can help your business get off the ground quickly, visit here or “Like” CorpNet.com on Facebook.
The U.S. economy has been on shaky ground for several years. Whether it’s news from Greece or Capitol Hill, it doesn’t take much to send serious shock waves throughout Wall Street, and ultimately down to Main Street. People are nervous, and for the American worker, that means staying with a stable job until the economy turns around.
According to the Bureau of National Affairs, only 0.5% of the American workforce voluntarily left their jobs in 2009. In 2010 and Q1 2011 it rose to 0.7% (for context, the reported voluntary turnover rate was 1.1% each year from 2005 to 2007). When approximately 14 million Americans are looking for work, many consider themselves lucky to be bringing home a paycheck at all. In a world full of uncertainty and delicate economies, it’s easy to see why people want to play it safe.
But just how many brilliant entrepreneurs are waiting on the sidelines for the market to come around? After all, how logical is it to jump ship when the economic picture remains precarious? According to a recent study by business consultancy MBO Partners, approximately 14% of employees hope to go independent in the next two years by starting their own business or freelancing.
Many employers have been coping with the economic downturn by cutting salaries and bonuses and reducing the number of new hires. This leads to anxious, demoralized and overworked employees on the lookout for something better. Some employees will remedy this by starting their own business.
Do you have dreams to start your own business, but aren’t quite sure if this is the right time? If so, here are a few things to think about.
Funding in This Economy
If you’re involved in the tech/social scene, there’s good news that some venture capital opportunities are returning. However, traditional bank funding for Main Street businesses is still tight. As part of the American Jobs Act, President Obama plans to ask the SEC for ways to reduce the “regulatory burdens on small business capital formation,” perhaps via crowdfunding and mini-offerings.
What this means is that many aspiring business owners will need to start small and self-finance. After all, it’s more than possible to start a successful business with just a small investment. Keep in mind, however, that only you and your family can truly assess how much risk is appropriate, and for how long you can forgo a salary.
Market Opportunities in This Economy
As a result of this recession/recovery, businesses everywhere are looking for ways to cut costs and be more efficient. While the idea of leaner operations doesn’t translate positively for the majority of the American workforce, it can be advantageous for some enterprising small businesses. For instance, if your business idea can help companies reduce costs or increase productivity, look forward to a receptive audience. This is particularly true for freelancers and contract professionals and developers of collaboration tools and other “streamlining” technology.
The Advantage of Starting When the Economy Is Down
It may seem counter-intuitive, but many experts think an economic downtime is the perfect time to start a business. If you wait for the economy to be in full swing, you’ll be too late.
Right now real estate prices and low interest rates are attractive. You have an opportunity to get the wheels in motion now, so that your product or service/business are ready to take advantage of a return in consumer confidence.
Be Honest About Your Motivation
Sit down and ask yourself, “Do I really want this business, or am I just trying to escape something else?” If you’re truly passionate about your business idea, get a move on. But workplace disillusion is not a good enough reason to become an entrepreneur. Starting a business takes tremendous sacrifice and hard work; you’ve got to love what you’re doing to keep at it.
Starting a business in a down economy can be a scary endeavor, but isn’t the idea of abandoning your dreams even more terrifying? No one can advise you whether starting a business is right for you, or whether the timing is right, but sometimes a challenge can be an opportunity in disguise.
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