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How You Can Leverage a Layoff

Jobless? Take this as an opportunity to start your own business.

Diane Lindquist is a four-decade veteran of journalism and an expert on the trade economy of the U.S.-Mexico border. When the San Diego Union-Tribune offered her a buyout in January 2007, after nearly 30 years at the newspaper, she saw the writing on the wall: Older, higher-paid reporters were being shown the door in the name of cost savings. But she also saw opportunity: Where would her readers turn for institutional knowledge and in-depth analysis about the border business scene?

Lindquist decided to take the buyout cash and start her own news operation, mexbiznews.com. The site, launched in the fall of 2008, aggregates outside content but also offers original reports aimed at American investors who are interested in Mexican trade and industry. Advertising has so far been scarce, but Lindquist has found a niche--and it's pretty much all her own.

"I realized I was offering a one-stop shop for all daily Mexico business news as well as the original reporting I'm doing," she says. "I still think people out there want news, it's just a matter of figuring out a way of how to deliver it."

Helping Hands

Entrepreneurs-to-be don't have to go it alone. Here are some resources for the recently laid-off who are thinking of starting a business:

  • SCORE is a nonprofit group that calls itself "counselors to America's small business." Online resources abound, from business-plan templates to a guide on estimating startup expenses. But the organization also offers web-based workshops and regional offices with free in-person business counseling.

  • LinkedIn is MySpace for grownups. In other words, it's a social networking site for people in business. If you haven't done it already, start an account. You'll likely find other folks in similar fields, and you can connect with them, share advice and trade war stories. It's also a good place to advertise your services, especially if they're business-to-business.

  • You could do worse than to follow the trials and tribulations of a fellow entrepreneur. Greg Digneo, a laid-off product manager, is launching a website that will connect fellow startup owners who want to exchange services. He has documented his project, which he launched in 30 days with only $500, at morecaffeineplease.com.

  • Got product? Set up a store at eBay,  Amazon or CafĂ© Press. It's easy.

  • If you're taking a real-world profession (such as accounting or journalism) online, you might want to learn a little about the digital domain first. Low-cost courses abound at the community college and adult-school level, and even UC Berkeley and the City University of New York offer classes on making the transition from print journalism to website publishing. Check out Mark Glaser's MediaShift site at PBS for online journalism insight.

  • Laid-off journalists who want to start their own online media empires can also turn to Six Apart's TypePad for free hosting, promotion and advertising assistance.
  • The path she took--using her expertise to spin off an independent, entrepreneurial version of her corporate gig--is a popular one these days. With national unemployment now at 7.2 percent and industries ranging from publishing to transportation to manufacturing shedding jobs by the thousands, many in the out-of-work sector are exploring startups that lie close to home.

    The transition from worker bee to lonely boss is never easy, but experts say that there's a history of successful endeavors that were started in a down economy. Workers can take advantage of buyouts, severance packages and cashed-in 401(k)s. They can translate their experience in bureaucratic operations to more efficient, service-oriented companies. And some, at least, will become financially independent in the process.

    "It's not going to be easy to find employment right now," says UC Santa Cruz economics professor Rob Fairlie. "So, in that sense, it's not a bad time to come up with an idea for a business."

    In conducting research for his 2008 book, Race and Entrepreneurial Success, Fairlie discovered that novice business owners who came from jobs dealing in "similar goods and services" were as much as 40 percent more successful with startups than those who were winging it in an unknown field. "It's the classic American Dream that 'I can just do anything I want,'" he says, "but the reality is it's important to know how to do things. You need those skills."

    In the ailing field of journalism, where advertising dollars and eyeballs continue to migrate online, laid-off reporters are taking their old beats and turning them into highly focused, web-based blogs and communities. Many have yet to see the kind of ad income that can replace their old salaries, but most are confident that the income and audiences will materialize.

    "You have to do a lot of hustling, you have to do a lot of marketing," says Mark Glaser, executive editor of the PBS-run site MediaShift. "Those are skills that journalists don't have and aren't normally taught in journalism school."

    Of course, that's changing. Glaser notes that recently launched courses at UC Berkeley and the City University of New York explore entrepreneurial journalism. Both the Knight Digital Media Center at Berkeley and the Poynter Institute in St. Petersburg, Fla., also offer seminars, workshops and classes in digital journalism. And late last year, Six Apart, the company behind TypePad blogging software and hosting, began offering free services to laid-off journalists.

    Kevin Bronson was let go as an entertainment editor in 2008 after nearly two decades at the Los Angeles Times. He started the paper's first music blog, Buzz Bands, and he made it independent last year. Bronson goes out six nights a week to chronicle Los Angeles's indie rock scene--something he did while at the Times. The result is that he's got a lock on his topic, and though advertising is slow going, investment was minimal. And the tech learning curve, at least for him, has been nil. It's easy, Bronson says. Journalists just have to adjust their mind-sets.

    "Old-school journalists have to broaden their perception of what constitutes content," he says. "For my blog, I hesitate to do a post without a photo, music download or video."

    Less Clear Transitions
    Workers in other industries might find the transition from worker bee to business owner less cut and dried. Michigan's auto industry is reeling from revenue losses experienced by the Big Three car makers. The industry accounts for 70 percent of the 33,000 manufacturing jobs lost in the state in 2007 and 2008, according to the University of Michigan. The problem is, with demand for cars at historic lows, it's hard even for laid-off workers with unique skills to find a niche in a shrinking market.

    Robert Wiseman, professor of management at Michigan State University's Eli Broad College of Business, says, "It's a difficult road to be an entrepreneur in this industry." Even so, he says, there are some paths, including taking managerial, technical and manufacturing skills to other sectors. For example, an accountant laid off from General Motors could establish her own bookkeeping firm and offer her services to companies in more robust fields.

    Meanwhile the service industry, home of those jobs no one seems to want to do, has plenty of opportunity for enterprising entrepreneurs who don't mind getting their hands dirty, says Bob Shepherd, district director of the Central North Florida chapter of small business nonprofit advisory group SCORE. He implores the idle to start landscaping, painting, car-washing and housecleaning businesses by soliciting work door-to-door if they have to. If business takes off, entrepreneurs can hire crews and take a seat managing the startup, he says.

    And career coach Hallie Crawford, author of Flying Solo: Career Transition Tips for Singles, says the world is your oyster if you can offer virtual services to the next entrepreneur.

    "I have a marketing consultant, and I've never met her," Crawford says. Accounting, personal assistant and web-design startups are hot fields and require a computer, a phone, some software, and almost zero startup funds, she says.

    "Were you a financial officer or an administrative assistant at your job?" Crawford says. "Almost anything you did in an office, you can do virtually. You need business cards, maybe a website. The only catch is marketing. While it's a low cost to start, you have to be assertive and proactive."

    Greg Digneo is a laid-off product manager who recently decided to start up a web-based company that will essentially pair up laid-off workers-turned-entrepreneurs who have goods and services to offer each other. (He also vowed to spend $500 on the endeavor, which he documented on his blog morecaffeineplease.com.)

    "If you're a startup with $1,000 budgeted for marketing, the chances are you're not going to be able to hire a marketing firm," the 26-year-old New Jersey resident explains, "but you can hire someone who's a marketing expert who's been recently laid off."

    So far, Digneo says he's putting 10 to 12 hours a day into his project and loving every minute of it: "Now I get to do something I really wanted to do."



    Transition Tips
    Our experts offer five tips for making the transition from jobless to proprietor:
    1. Stay in your field. Entrepreneurs who come from jobs dealing in "similar goods and services" as their startups are 40 percent more likely to survive, according to UC Santa Cruz economics professor Rob Fairlie. Expertise has its rewards.
    2. Market yourself. It might be easy to run a virtual business such as a personal assistant service or bookkeeping via laptops and mobile phones, but you'll get no business if no one knows you exist. Professional networking, well-designed websites and proper business cards are a must, says Hallie Crawford, author of Flying Solo: Career Transition Tips for Singles.
    3. Keep business hours. If you're starting an endeavor from home, it's easy to forget that you're at work. Keeping regular hours, creating workspace, and dressing for the job can keep you focused. Greg Digneo, for example, is a laid-off product manager who works 10- to 12-hour days at home in his effort to start up a website-based business that will connect entrepreneurs. But "you can start to feel really isolated" working alone at home, says Crawford, so schedule regular breaks, meetings and even meals outside.
    4. Get your numbers sorted. Businesses don't grow from water and sunlight. Even minimal operations from home will take planning and spreadsheets. Bigger endeavors will require serious money. Think ahead before you're in the red. You might need as little as a $5,000 personal loan, for example, for web hosting, design services and marketing. "We're advising people to slow down and work on their resources," says Michael L. Keaton, spokesman for the small business nonprofit advisory group SCORE.
    5. Find a niche. Stay in your field of expertise, yes. But narrow it down. What can you start up that no one else has thought of? Where are the openings in the market or audience? Journalists who make the transition from corporate print to online publisher, for example, "have to have a topic, a niche and have the ability to work on their own," says Mark Glaser, executive editor of the PBS-run site MediaShift.
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