More Than 1 in 10 People Who Recently Lost a Job Started Their Own Business. Should You?

Although the U.S. labor market had a pretty solid 2022 and has remained fairly healthy in 2023, layoffs have still come into play. In fact, data from BizReport reveals that roughly 200,000 jobs were lost due to layoffs in 2022 and 2023. And for every 100 people who lost their jobs during that time, 13 started their own companies.

But should you start a small business after losing your job? You may be tempted to, but it's really important to go in prepared. So ask yourself these key questions before venturing out on your own in response to a layoff.

1. Do I have a decent chunk of money in savings?

It can take many months, if not years, for a new business to become profitable. And you'll need a way to pay your bills while you build your business up. That's why it's best to start a new business at a time when you have plenty of money in your savings account.

In fact, you may even want to tell yourself that you won't start a business until you have enough cash in the bank to cover a full year of essential living expenses. The last thing you want is to take on personal debt in the course of making a career pivot and venturing out on your own.

2. Am I really ready to be my own boss?

It's nice not having to take orders from other people. But to run a business, you need to be focused, disciplined, and willing to put in the time. And you may not be in that place. If that's the case, you're probably better off applying to work for someone else who will be tasked with running the company.

Let's say that in addition to having lost your job, you're going through some life changes. Maybe you recently had a baby or are dealing with an aging parent's health issues. These are perfectly good reasons to decide that it's not the right time to open a business you have to oversee every aspect of.

Why a Business Credit Card Could Transform Your Small Business

These business credit cards that offer a convenient and efficient way to separate personal and business expenses, simplifying accounting and tax reporting.

Additionally, business cards can provide valuable perks such as rewards points, cashback, and expense tracking tools, enhancing financial management and the potential to help save money in the long run.

Offer	Our Rating	Welcome Offer	Rewards Program	APR
Ink Business Unlimited® Credit Card Apply Now for Ink Business Unlimited® Credit Card On Chase's Secure Website.	Rating image, 4.50 out of 5 stars. 4.50/5 Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor	Earn $900 bonus cash back Earn $900 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening.	Earn unlimited 1.5% cash back on every purchase Earn unlimited 1.5% cash back on every purchase made for your business	Intro: 0% Intro APR on Purchases Purchases: 0% Intro APR on Purchases, 12 months Balance Transfers: N/A Regular: 18.49% - 24.49% Variable
Ink Business Cash® Credit Card Apply Now for Ink Business Cash® Credit Card On Chase's Secure Website.	Rating image, 4.50 out of 5 stars. 4.50/5 Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor	Earn up to $750 bonus cash back Earn $350 when you spend $3,000 on purchases in the first three months and an additional $400 when you spend $6,000 on purchases in the first six months after account opening.	Earn 5% cash back in select business categories Earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year. Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year. Earn 1% cash back on all other card purchases with no limit to the amount you can earn.	Intro: 0% Intro APR on Purchases Purchases: 0% Intro APR on Purchases, 12 months Balance Transfers: N/A Regular: 18.49% - 24.49% Variable

3. Do I have an actual business plan?

You may be interested in the idea of running your own company. But have you thought about what that will actually look like?

How will you sell and market your product or service? Where will your business be located? How much help will you need? And how will you pay to get your company up and running?

These are all questions you must have answers to before starting a business. If you're not at the point of having thought them through, then you may, at the very least, want to apply for some sort of temporary position while you iron out the details.

Starting a business could be a rewarding experience, and it's natural to consider doing so in the wake of a layoff. But before you dive in, ask yourself whether you're really in the right place logistically and financially. You may come to the realization that it's not the right time to start a business, and that waiting is a better choice.