Some attracted to idea of being the boss
Layoffs can spur some to go to work for themselves
When Brooktrout Technology handed engineering manager Eric Stutman a pink slip in November 2006 during its second wave of layoffs, the Needham man was almost relieved.
"The first round of layoffs was a real blow to morale," said Stutman, who had worked at the faxing company for a decade. "People were starting to wonder: Who's better off? The people who were laid off or the people who are here? The people who were laid off got a little severance and a fresh start. We're stuck now doing twice the job and the future didn't seem any brighter just because they were gone."
Less than a year after losing his job, Stutman opened personal fitness franchise One2One BodyScapes in Wayland and hasn't looked back.
For many small business owners, layoffs at larger firms were just the nudge they needed to take a leap of faith and work for themselves. If history offers any indication, the nation's small business community could experience a growth spurt during this recession. According to the Small Business Ad ministration, the number of self-employed workers had been declining for a few years until the dust from the 2001 dot-com bust settled. After bottoming out with 9.9 million in 2002, the self-employed ranks have risen annually to 10.6 million in 2006, the most recent data available.
There are a number of reasons people become attracted to the idea of working for themselves during a downturn. Industry specialists say people often become disillusioned with the direction of their jobs and industry and desire more control over their future. But going professionally independent is often difficult.
"The biggest challenge anyone faces who wants to start their own business after being laid off is having enough finances to sustain the basics of life until the business is earning a profit," said author Lita Epstein, whose book "Surviving A Layoff: A Week-by-Week Guide to Getting Your Life Back Together" will be published this month by Adams Media.
Epstein, who had already been laid off twice, decided when she worked as content director for www.mostchoice.com during the dot-com boom that she'd be better off as an independent financial writer. "I wanted to save about 12 months of income because I knew it was a risky venture," she said. But the start-up cut her loose in 2001, when she only had six months of income stashed away. "I took the chance anyway."
Even though some people decide to start a business after unexpectedly finding themselves jobless, small business organizations and entrepreneurs themselves say many of the most successful self-appointed bosses have incubated their escape plans for several months, if not years. Some have taken classes to switch career paths or spent more time becoming better at hobbies that held the potential to become businesses. And many have saved up money to cover the costs of launching a new business.
"They then hang out a shingle, network like mad with previous managers and contacts, join trade groups, and sell their products or services," said Margaret Somer, regional director at the Massachusetts Small Business Development Center at Salem State College.
Striking out on one's own has been a particularly attractive option in Massachusetts, Somer said, because the unemployed "often assess their resources and realize that they have a college degree or better, a home to use as loan collateral, if needed, possibly a financial package along with the layoff, professional or technical skills, business networks, and a good history with companies they have worked with."
That self-starter spirit has flickered across the country for the past 20 or 30 years due to factory and office closures in industries ranging from automobiles to computers. But the independence often comes at a cost: It took Internet marketing consultant Doug Bates of Belmont about three years to earn as much on his own as he did when he was laid off from the same line of work at Aquent in 2001.
"I was starting a business during the middle of the dot-com depression, which was not the ideal time to do what I was doing," said Bates, 48.
There's also the dilemma of not having enough manpower. According to the SBA, the majority of small businesses have four or fewer workers, which can leave a large portion of the work and responsibility on the owner.
"A frustration of many of these reluctant entrepreneurs is the challenge of continually selling while often being the sole provider of services or products in their tiny business," said Somer, based on her observations from seven years of counseling entrepreneurs. "Therefore, most prefer to go back to a full-time job with benefits when the economy improves or the industry is hiring again."
But many small business owners say they don't regret their decision even as the worsening recession puts their nascent endeavors at risk. They say they'd much rather hear a customer say they're losing that client's account than hear a boss say they're losing their jobs.
Take Sue Burton of Marshfield. She wasn't sure what she would do after she volunteered to be laid off from JPMorgan Chase in March 2005, but the product management and marketing vice president was sure she didn't want to hand her team any more pink slips.
"Being in management, I was responsible for making Schindler's list. You knew every day who was going to go," said Burton, now 41. "It was very emotionally depleting."
So she shelled out about $2,600 to take two VocationVacations - two- to three-day immersion programs in New York showing her what the workday is like, first, as a television producer and, next, as a corporate comedian.
Now, the mother of two young boys is her own boss, earning a living by telling Dilbert-esque jokes at fund-raisers, teaching workshops on finding reasons to laugh in life, and co-writing a humorous musical about stress.
"As challenging as this is, I don't feel like I'm any worse off," said Burton, who over the past three years also took consulting gigs producing TV commercials for a company that recently had layoffs. "Some of the people I used to work for are jumping out of windows. . . . As much as there was a perceived peace of mind of having a day job and steady paycheck, those people have no more peace of mind than I do."
The choice is equally clear for Stutman, the 42-year-old personal trainer who has a master's degree in biomedical engineering.
In his previous job, Stutman said, "I was making the world a safer place to fax for 10 years and it wasn't very rewarding."
Nicole C. Wong can be reached at email@example.com.