Rachel Bridge
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Nicola Brown returned home from a trip to Florida to surprise her brother on his birthday last October to find a surprise waiting for her too. Unfortunately her discovery was rather less pleasant. The 26-year-old marketing manager had been made redundant from her job at a photographic studio.
Since she had been working there less than three months she was not entitled to any redundancy pay.
She did not let it get her down, however. Instead she seized the opportunity to start a business of her own. Brown spent £500 of her growing overdraft on a computer and started a graphic-design business in a shed at the bottom of her mother’s garden in Shrewsbury – and called it In The Shed. She now designs logos, leaflets and websites for small businesses.
“I never really enjoyed working for other people,” she said, “because although it feels like the most secure thing in the world to have a job, I have learnt that it is not.
“I love the fact that I can work at my own pace. I now want to build up the business for the long term.”
Brown is not alone. The past few months have seen a surge in the number of new businesses being started up by people who have been made redundant and decided that, recession or not, there is no better time to take the plunge.
John Wright, national chairman of the Federation of Small Businesses, said: “We are hearing anecdotal evidence that a significant number of people who are being made redundant in the recession are considering starting a business of their own.
“If someone is made redundant now it can be a good time for them to start a business. This is because, unlike the last recession, many people who have been made redundant have transferable skills that can be put to good use in their own enterprise.”
Jason Young is one of many who have found he has the perfect transferable skills to start a business of his own.
When Young, 38, was made redundant from his job as construction director of a house-building firm in Nottinghamshire, he decided to stick to what he knew and start his own building business, Open Construction. “I was burnt out when I was made redundant,” he said. “I didn’t fancy getting back into the rat race working for somebody else.”
He received only £990 in redundancy money, most of which went on buying business insurance. But Young was able to buy the truck he drove in his former job, and quickly managed to land a contract to convert a building into offices.
And because the firm he had worked for had gone into administration, making the entire workforce redundant, he was able to hire former colleagues to work for him.
He runs the business from the spare room at his home in Bottesford, Nottinghamshire, and said that starting up on his own has reaped unexpected benefits. “I do the school run three or four times a week now and I see loads more of my children. So in that respect it has been really positive. It is not something I would have done had the recession not happened, but because I have been put in that position I just want to seize the opportunity now. I am loving it.”
Emma Jones, founder of Enterprisenation.com, the home-business website, said starting up your own firm can be the ideal antidote to being made redundant because it gives you back the one thing you have been denied – control over your life.
“When you become your own boss you take control of your destiny. There is nobody to decide whether you still have a job and people are really relishing the fact that they are taking that control back.”
She said starting up a business from scratch can be surprisingly inexpensive, especially if you run it from home and so save on office and commuting costs. First-timers should also take advantage of Skype for free phone calls, Google Apps for free business software and free website packages.
Starting a business when you had not actually planned to is not something to be undertaken lightly, however, warns Keith Hunt, managing partner of Results International, the firm of business advisers. He said that it was not enough to f o r m a c o m p a n y s i m p l y because you had been made redundant – you had to really want to do it.
“You need to be passionate about what you are doing. Don’t do it grudgingly,” he said.
Starting a business requires a far bigger commitment than getting another job. “Ask yourself whether you really have the time and the commitment for it,” said Hunt. “Starting a business needs your full attention and you need the full support of your family.
“If you are planning to do it on a part-time basis or just at the weekends, it is probably not going to work.”
Hunt said it was vital to have a proper structure to your day. “Have a business plan and stick to it. If you wake up every morning without a plan you will find that the days drift by and you won’t really achieve what you need to get the business done,” he said.
Hunt also warns against jumping into a business you know very little about – no matter how appealing it sounds. “Stick with what you know. And if you don’t know it, learn it before you dive in.
“For example, if you want to set up a shop or a restaurant, go and get some practical experience of working in one before you dive in, even if you have to take a fairly lowly job.
“There is nothing wrong with taking six months off to work out what you really are going to be good at.”
Alan Adamson, a partner with Green Square, the corporate adviser, also stresses the importance of beginning a business for the right reasons.
“Start-ups are normally done by people who are positive and ambitious, and doing it as a last resort simply because you have been made redundant is a recipe for disaster. Unless you are very driven you will have a low chance of success.
“There is a very different mindset involved in starting and running your own business compared with being employed by someone else. There is no safety net and to make it successful you need to be very proactive,” he said.
Heather Noble, 42, is certainly that. Just a month after being made redundant from her job as practice manager for a firm of architects in February, she started Salt Solutions, to manage events ranging from product launches to office relocations for small businesses.
In an effort to drum up business she has been networking, joining everything from a local public-speaking group to the Women’s Institute.
She said: “I started thinking there must be something I can do that would mean I wouldn’t be controlled by somebody else’s decision-making.”
Noble has so far spent £1,000 of her £5,000 redundancy money starting up the business, using the cash to create a website, join networking associations and get business cards and promotional material printed. Unfortunately, her efforts have not secured any work yet but she remains hopeful that it will start to flow in the next couple of months.
“It is a rollercoaster ride,” she said. “There are days when I think why don’t I just get a job where I can go in at 9am and leave at 6pm, and there are days when I eat chocolate biscuits nonstop. Some days it is really scary and it can be quite lonely. But I am glad that I am doing it because if I don’t I might regret it later in life.”
For those who find the idea of starting a business from scratch too daunting, another option that is proving popular is buying the franchise of an existing business, such as Clarks Shoes, Domino’s Pizza or Subway.
This is the route Martin Gibson, 39, has chosen. He was made redundant in November from his job as quality manager in a paper mill in Blackburn after working there 23 years.
He has since decided to put his redundancy money of £70,000 towards buying a Subway franchise in Lancashire, where he lives with his wife and three children. He hopes to take over an existing store next month.
Gibson said: “After being made redundant I did have one interview for a job in a paper mill but my heart wasn’t in it. It just didn’t feel right and I would have been left thinking, what if I had gone ahead with Subway, where I would be now?
“With Subway you have a tried and tested formula and brand, but you can do your own advertising and promotions on a local basis and it was that little bit of freedom that was calling to me. I feel it is my destiny calling.”
HOW TO IMPROVE YOUR CHANCES OF SUCCESS
Be 100% committed. If you are half hearted you will be less likely to succeed. Do something you know about and understand. Now is not the time to plunge into the unknown. Analyse your motivation. Ask why you are doing this and what you hope to get out of it. Don’t be in too much of a rush. Taking six months to consider your options may stop you making big mistakes. Do not try to keep your options open by applying for jobs at the same time. You will end up doing both things badly.
Don’t assume that friends and colleagues who said they would buy your products or services actually will. Talk is cheap. Make sure you have the full support of your family. It will be a lot harder if you don’t. Consider starting up your business with a partner who can share the workload and the stress and help you stay motivated. Work out how much cash you are going to need and then double it. Understand what will make your product or service stand out from the competition. If you do not know, do not proceed until you do.
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