From the February 2009 issue of Entrepreneur

When Ashish Gadnis was laid off from his position as president of a Minnesota software development company, he managed to launch his new life before even leaving the parking lot. On the way to his car, he ran into the vice president of operations who had also been let go, and the two decided to start their own business.

The week Jason Wonacott lost his job as director of corporate communications for a Los Angeles online game publisher, he became his own boss and signed on his former employer as his first client.

When news of the Wall Street crash hit every U.S. household, Christine Marchuska felt the effects directly. Working in Manhattan at a major U.S. investment bank, Marchuska saw her layoff as a sign that it was time to become an entrepreneur.

"People look around at the economy, and what they thought were safe and secure positions are no longer safe or secure," says George Solomon, associate professor of management and director of the Center for Entrepreneurial Excellence at The George Washington University. Solomon saw the number of startups increase during the recessions of 1983 and 2001 and predicts they'll increase in the current economy as well.

So if you've just been laid off or think you're about to, get inspired by these entrepreneurs who turned their pink slips into a green light to start businesses.

Attitude is Key
No time is ever a good time for a layoff, but for Gadnis, it couldn't have been a worse time. With a new home and a new baby, losing his job was definitely not part of the plan. However, after receiving the news, Gadnis soon found a business partner, thought up a business name, Forward Hindsight Inc., and registered his new strategy and risk management consulting business all before the day was over.

That was in 2004. Today, Forward Hindsight boasts an impressive list of clients, including Northwest Airlines, and has even expanded into the Middle East and India. In 2008, the Minneapolis-based company made about $3 million in sales, and Gadnis aims to increase that number in the next couple of years.

Startup Dos and Don'ts
Thinking about starting a business instead of simply looking for another corporate job? Then heed these words of advice from George Solomon, director of the Center for Entrepreneurial Excellence at The George Washington University.

DOs:
  • Do your homework.
  • Do make sure you know what you're getting into in terms of cash commitments and financial obligations.
  • Do consider buying a franchise to get your feet wet.
  • Do pick an industry, product line or service you know something about.
  • Do start a business to be excellent at what you do.
  • Do develop a relationship with a commercial loan officer.
DON'Ts:
  • Don't dive in head first.
  • Don't invest in businesses that promise immediate ROI.
  • Don't overextend yourself financially and cognitively.
  • Don't go into a business you know nothing about or you'll spend all your time trying to learn the business.
  • Don't start a business from a panic standpoint.
  • Don't start a business to make money.
  • Don't start a business in which your strategy is to offer low prices and high volume, because you can't compete. Sales do not equal profits.

With extensive experience as former director at United Health Group and head of software development for an e-learning company, Gadnis was equipped with contacts and know-how, but his attitude was the key to getting back on his feet so quickly. Instead of feeling frustrated or incompetent, Gadnis kept his ego in check. "In the past four years, I've learned that in addition to a zero basis for fear, you have to have a zero basis for ego," says Gadnis, 39. "If you have no ego, you can get through any difficult moments." Now, with a successful business under way, Gadnis has set his sights on a much bigger goal: He wants to be working to solve world hunger full time by the time he's 45.

Exit Strategy
When Wonacott lost his job in April 2007, he was prepared. He had caught wind of possible cuts and, having been through a layoff before, wanted to be in the driver's seat this time. He prepared a proposal and, when the fateful day arrived, approached the company's CEO and vice president of marketing with a deal they couldn't refuse: He would continue doing their PR work but wouldn't require the salary or benefits of an employee. They agreed and not only became his first client, but also leveraged their networks to win him two other clients. "I have never professionally been so scared," admits Wonacott, 36, who, thanks to his courage and a good severance package, was able to walk away from the layoff with the beginning phases of Wonacott Communications LLC, a full-service PR and integrated communications practice in Los Angeles.

After holding several PR positions, Wonacott knew the industry well, but wasn't so familiar with owning a business. "Going into a position where you don't have someone else paying you every two weeks, you have to change the way you think," he says. He had also long relied on having the assistance of IT specialists, HR experts and office managers at his fingertips, but when he went out on his own, those responsibilities fell on his shoulders. To cope, he turned to his network, where he found a friend of a friend who could offer tech support when needed. He also found his business accountant and attorney and got business leads for the first six months.

Now Wonacott is preparing to move into a bigger office space and projects 2009 sales to reach about $500,000. "We're not huge, and I don't want to be huge," he says. "But it's really gratifying to see that level of both personal and professional success."

Passion Pays
"Usually people pick something they have a passion for, and that passion gives them a certain set of knowledge," says Bryan Howe, CEO and founder of business planning firm MasterPlans.com.

In May, when Marchuska fell victim to the financial crisis and lost her job after working in the finance sector for six years, she did exactly that: She went after her passion and started Marchuska, an eco-friendly clothing line in Endicott, New York, with her brother, Justin Marchuska, 35. A few months later, she launched the women's line Cmarchuska on her own. "I love fashion and have a strong love for the environment," she says, "so I wanted to figure out a way I could tie that together."

Never mind that Marchuska had no experience in the fashion industry. She signed up for a sewing class so she could understand what goes into constructing a garment, bought DVDs and books, researched online, met people in the industry and found a pattern/sample maker as well as a Canadian mill that produces organic cotton.

Marchuska started the venture within months of being laid off. She landed her products on the shelves of retailers, developed an e-commerce site and now projects 2009 sales of about $100,000. "Everyone's feeling the tough times right now," says Marchuska, 28. "It's not one industry or one country that's suffering. But if you're going to try something and you can afford to, now is definitely the time to go for it."