1 in 10 Laid-Off Workers Plan to Start Their Own Business. Should You?

It's a route that has its pros and cons. 

Today's labor market is very different from the labor market two years ago. In 2020, unemployment was rampant as everyone scrambled to cope with the pandemic. But this year, jobs have been plentiful, so much so that many companies have been desperate to hire.

That doesn't mean workers haven't fallen victim to layoffs, though. Even in a strong economy, companies can still make the decision to downsize staff if they're looking to conserve cash. And with recession warnings hitting the news, a lot of companies may soon start reassessing their staffing needs -- and making changes accordingly.

If you've been let go from your job, or if you're worried about that happening, you may be considering starting your own business. A recent Digital.com survey found that 10% of workers who were laid off in 2022 plan to start a business rather than return to the labor force as an employee of another company. 

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

The upside of starting your own business

When you're a business owner, you get to call the shots, and you don't have to report to anyone else (like a nagging boss who makes your life miserable). Also, the more time and effort you put into your business, the more financial benefits you might enjoy. 

Plus, starting a business of your own could give you a chance to pursue work you actually find meaningful. Let's say you're great at marketing but at your last job, you spent most of your time trying to help sell products you really couldn't care less about. You may decide to open a marketing firm that partners with charities and nonprofits to help them grow. And that's work you might feel really good about.

The downside of starting your own business

While there's much to be gained by starting a business, you should know that it could be all-consuming, especially in the beginning. You may find yourself overwhelmed at the sheer number of tasks that are on you to oversee and complete. This holds true even if you're able to hire some staff early on. 

In fact, a big reason so many people have quit their jobs over the past year is to attain a better work-life balance. But if you start a business, you might suffer in that regard, especially during your first year or two. 

Then there's the financial aspect. It can take a lot of time for a new business to turn a profit. And that could put a lot of stress on your plate. 

That said, you can minimize that stress by boosting your savings before starting a business so you have cash reserves to tap to cover your bills. That way, you can focus on getting your venture off the ground without having to spend time reworking your household budget constantly. 

Is starting a business the right move for you?

If you've been laid off, you may be considering starting a business rather than job hunting. The same might hold true even if you're gainfully employed but are looking for a change. 

Running your own business could be a rewarding move that truly pays off. Just make sure you're really up to the challenge before going this route, and recognize that you may need to sweat it out for a few years to enjoy the benefits in the long run.