Losing your job can be very stressful and challenging, especially if the job loss came as a surprise. Obviously, you have to deal with the psychological impact of being laid off and with the loss of income. And then, there is the subject of trying to get a new job.
The average person takes an average (mean) of 37 weeks to find a new job. And a large group of people take well over one year to find a new position. For many people, these are very scary statistics. And it gets worse.
People that have been looking for a job for more than 6 months are perceived as obsolete. Hiring managers wonder why they have not been able to get a job. Instead, they hire other candidates that have been unemployed for less time. Mind you, we are in one of the worst hiring environments where long term unemployment is common. However, hiring managers have this bias against people that have “big unemployment gaps” in their resumes. Fighting against this current seldom works. Ditto for trying to explain yourself.
A better strategy is to find a way around this issue by differentiating yourself from other candidates. There is a way to do this and position you in a better light. It’s simple – start a company
In this post I will focus on starting a business as a strategy to land a job elsewhere. Unless your side business succeeds, of course. If that happens, more power to you. You just became an entrepreneur.
Closing the gap: Start a company
There are three reasons why you should consider launching a company if you suddenly become unemployed. The first one is that it may generate income and help you out. Keep in mind, this is very difficult to pull off – but could happen. The second reason is that it keeps your skills updated. You can use this experience to learn additional skills that are valuable to potential employers. Skills such as:
- Project management
- Finance / accounting
- Decision making
The third and last reason is that starting a company will close the employment gap in your resume. You will have continuity of employment and your resume will look more attractive than those of other candidates.
What business to focus on?
I’d suggest you focus on the type of company that has low start-ups costs. One great alternative is to become a consulting freelancer in your prior occupation. For example, if you worked in the marketing department of a corporation, become a marketing freelancer. You can do this for almost any specialty.
The advantage of keeping your new consulting business related to your old employment specialty is that you will be able to keep your skills updated. Personally, I would steer clear of starting a business in something completely different, unless:
- You want to change careers
- It provides a skill you are looking to develop
- It interests you
- Your are pretty sure you want to do it
Setting up the business
There is a lot of information on the Internet about starting a business, so I won’t rehash all of it. However, I assume you will be operating as a one person business so you obviously need a work space, materials, a computer and an internet connection.
Unless you have the money or the experience, delay building a website. Or, build a very simple one on the cheap. This may sound counter intuitive, but remember that the main objective is to land a new job.
However, consider buying a domain for your business and using an email address at that domain. This is easy and cheap to do. More importantly, it looks professional. It definitely looks better than using a Gmail or Yahoo! address (AOL anyone? ).
By the way, you need to decide the structure in which to operate the business. Here is an article that will help you make that decision. My only advice on this matter is to spend some money and consult a CPA. This is very important because each structure has definite advantages and disadvantages. Additionally, accounting for revenues/expenses varies by structure. A CPA will help you make the right choice. Consider that $300 as money well spent.
Also, while on the subject of CPAs, talk to them about how this will affect your unemployment benefits. You will need to comply with the law and reporting requirements.
How to finance it?
Ideally, starting your business should not cost a lot of money. However, this varies based on what type of business you chose to start. If you need financing, you should consider reading our post on business financing strategies for the self employed. Personally, I am a big fan of the SBA Microloan program because they provide funding and advice.
However, keep in mind that getting financing as a self employed individual will be nearly impossible. The fact is that few, aside form the SBA, will lend you money to start a business. However, if your business is running and producing revenue you will have some options (such as this one which we offer).
Running your business
How to operate your company goes beyond the scope of this post. However, run your business like a real company and mean it. Make every effort to get customers and revenues. Give it your best. Don’t make the mistake of starting a company and then doing nothing – basically leaving it as window dressing for your resume. Doing the latter will fail as most hiring manages will see right through it.
The resume strategy
There are many ways to handle including your new venture in your resume. I am not sure which works best but let me tell you what I would do. Start the company soon after getting laid off, but leave it off your resume at first. Split your time between running your company and trying to find a new job. If you find a new job quickly, congratulations!
If you don’t find a job after 4 or 5 months, put your new business in your resume. Here is an important detail. I assume you started your company soon after losing your job. Although it wasn’t listed it in your resume, the business was there and you were active it in. This means you can use a start date for the new business that is close to the end date of your old job. Therefore, a minimal gap in employment. Now, your resume looks competitive.
Will potential employers see right through what you are doing? Absolutely! That’s what I wrote the next section.
What to tell prospective employers?
There is always the chance that a chance that a client will want to hire you. And if this happens, you have succeeded. However, you will probably also look for employment at other places.
Obviously, your prospective employers will notice that you became a freelancer shortly after being laid off. They may start to ask questions about this, and some of these questions could be uncomfortable. If they ask, I can offer simple advice. Tell them the truth with no sugarcoating and no apologies.
Tell them how you started a company shortly after being laid off so that you could generate income and keep your skills sharp. You may want to go into how owning your own business has given you a more global view of things. You no longer have the view of a sole contributor that has a narrow focus of expertise. Instead, you have expanded your skills and have a better feel at how things are connected in the business and how they impact each other. It’s the truth, and in my opinion, it makes you more marketable.
Could some folks view this negatively? Yes, some could. Some interviewers may start questioning your desire to get a job if you already have a business. Some may ask if your business is failing. These are uncomfortable questions that you can tackle head on. Personally, I don’t think there is any shame in telling them that the business did not work as you expected. You saw an opportunity, you took it and you learned from it. At least you had the courage and initiative to pursue it.
Good luck finding a job!