With employers cutting thousands of jobs each month amid a slowing economy, many downsized workers decide to start their own small businesses. The transition can be daunting as these new entrepreneurs contend with challenges that many never faced before.
Starting his own business punctured a few of the myths George Stahl had heard.
“A lot of people think that if you own your own business, you can set your own hours. I think that’s the biggest falsehood you run into,” said Stahl. He started a construction and contracting business in Troy, Mich., a few months ago, after losing his job running a program to teach business to inner-city youths.
Like many other new entrepreneurs, Stahl discovered that he has to do a variety of tasks that, while integral parts of owning a business, are peripheral to its core operation. Running GCS Enterprises means he’s the company’s main salesman, lead installer on many jobs and accountant. He’s in charge of payroll and billing.
“It’s a time management thing, where my job is no longer 9 to 5. When I wake up in the morning, I’m working,” he said.
Stahl also said it has taken some adjustment to get used to the absence of a steady paycheck.
“I’ll complete a job and a lot of times, it’s 60 to 90 days out till I get paid for it,” he said. “It’s definitely taught me to budget wisely.”
But that’s not to say there aren’t great joys and rewards from starting up a new company so soon after being laid off.
“I’ve been able to help out a lot of people as well,” he said, noting that he’s hired friends and acquaintances who were also laid off from white-collar jobs. “They’re keeping their houses, their cars. They’re not worried about what the next day is going to come to.”
Many new entrepreneurs feel the stress of waiting for the business to take off. But sudden, unexpected success, while clearly a blessing, can also mean plenty of worry.
Shawn Taylor expected the process of starting a business to take some time, and so she let her nanny go after she was laid off from the Chicago Tribune at the end of 2005. But just a few weeks later, she was so busy with freelance work that she had to scramble for child care.
Her business, Treetop Consulting Inc., is a writing, speaking and communications firm. “The challenge is handling so many different clients — I do so many different things,” she said.
Taylor has so much work that she’s thinking of expanding and taking on help, but the idea “keeps me up at night sometimes.”
“I really want highly skilled people who are ready to go,” she said. But the people who would be her first choice are already working in journalism. She’s considered hiring interns but “I don’t have time to get somebody up to speed.”
Taylor has run into another challenge that many, if not most, new businesses face — managing cash flow.
“I did work and waited for people to pay me — it was frustrating,” she said. So what she learned to do was have some clients, particularly small businesses who were new clients, pay her up front. She bills some of her larger clients every two weeks.
For Andy Gelsey, the challenges have been more psychic. He was laid off at the end of 2007 from a family-owned manufacturing business. After having little success finding a job in the depressed Detroit metro area, he decided to start Smokey’s DogHouse Treats, a company that he runs out of his home in West Bloomfield.
Although he was already working on the business, Gelsey said he’d take his son to school in the morning, and “I’m driving and realizing it’s 8 a.m. and I have no place to go.”
Back in his home office, he realized he was working not only for himself, but by himself. “We’re supposed to have a company picnic, and no one showed up,” he half-joked.
Without bosses or co-workers, Gelsey also found, “there’s no one else to pat you on the back and say, ‘Good job!’ ”
All of this made it hard for Gelsey to feel motivated.
He said he’s learned to deal with this challenge by building a support system, starting with his wife.
“Unless you have the support of your family or your partner, you’re not going to succeed,” he said.
Billy Maupin had similar feelings when he was forced to transition to being an entrepreneur after losing a job at a record company in 2002. He and his wife decided to open a restaurant in their hometown of Durham, N.C., a process that took about a year and a half.
A big challenge for him as he created Green Tango, which serves fresh salads, was “not having the large company to fall back on. … You definitely could pass the buck when you needed to (at a big company), but as a small business owner, you definitely can’t do that.
“Suddenly I was CEO, interviewing and hiring subcontractors and independent contractors, figuring out people who would fit,” Maupin said.
Becoming an employer for the first time was a huge challenge, said Maupin, who now has two restaurants.
“It’s difficult to depend on labor that you have today being there tomorrow,” he said, calling that dynamic a big change from when he was in the corporate world, where people tended to stay in jobs for a few years.
Maupin said he’s learned to “adapt with the people you have — but several times a year, you have to keep reinventing that.”
Joyce Rosenberg writes about small business issues for the Associated Press.
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