As the recession looms, many people are clinging to their jobs like a life raft in a hurricane. Plans to start a new business or grow a business are put off in favor of playing it safe.
The downfall of clinging to your job
I disagree with this approach, because I believe an entrepreneurial mindset can a good thing in a recession, and actually bolster careers.
Here are five reasons why:
Job security does not exist, even in growth periods
As technology innovations increase productivity, many jobs have become obsolete or automated. Since the 1980’s, goods-producing jobs have shifted to service-providing jobs, and the Bureau of Labor Statistics predicts this trend will continue through 2016. Thus, workers will likely change careers into service-related fields, many of which don’t currently exist.
Because of this phenomenon, today’s worker does not have the luxury of simply going to work and collecting a paycheck anymore; professionals must constantly network and learn new skills because changing jobs regularly is imminent. Those who don’t will find themselves unemployed.
While it is obvious from unemployment statistics that job placement is at an all-time low these days, let’s be clear. True job security has been a myth for awhile now, even before this messy recession took place. So why wait for the economy to get better before taking the plunge? Why let recession fears hold you back from entrepreneurship?
Recessions create opportunities for necessity-based entrepreneurship
Research shows that no matter what the economy looks like, entrepreneurship as a job category holds steady. This is because in good times entrepreneurs create opportunity-based businesses due to excess of cash flow, and in bad times entrepreneurs create necessity-based businesses due to lack of cash flow.
So do not think that just because companies are downsizing there is no room for new businesses. The opposite is true; the country needs small businesses because the larger ones have stopped innovating and fulfilling niche needs in order to cut costs. Furthermore, during a recession, consumers focus spending on need-based products, are less willing to pay brand-name prices, and are always looking for the more frugal alternative. All of these spaces are opportunities for entrepreneurs to create need-based solutions.
Lay-offs do not mean there is less work to do
As companies lay people off, it is usually not because the work those employees were doing has disappeared. In fact, companies turn that work into project-based work which gets outsourced at a higher price than if a full-time employee were to do it. Why? Because companies can still save money on the project by not paying out 401k and health benefits.
Savvy professionals know that even in a recession, they can get work in their field as a freelancer or consultant as long as they are willing adopt an entrepreneurial spirit. The internet has lowered entry-barriers for starting and marketing a freelance or consulting venture. Today, you can set up a basic website, print some business cards, and hit the streets to find high-paying project-based work.
Entrepreneurship fills in gaps on your resume, making you more marketable
Even if your end goal is to get another job, there is nothing that says entrepreneurship and job-hunting are mutually exclusive. This means that if you get laid off from work, the best thing to do is immediately start a company so you can spend your unemployed time wisely.
It took me some time to figure this out when I quit my job back in October 2008, just before the stock market crashed. The plan had been to take a well-deserved break for 2 months before starting a short job-hunt in January. Of course, as short turned to longer, I realized my traditional job options were pretty despairing.
I wanted to reclaim my power over my career, so I decided to do some online marketing consulting work on the side while waiting for job offers, which I eventually received. After turning down several unappealing job offers though, I realized that I already had a job – my marketing consulting business!
You should never have gaps in your resume, because you can always create work for yourself as an entrepreneur. Now, when I meet with CEOs of prominent Chicago businesses, they are impressed with my resume because I can bring something to the table, even in the face of adversity.
Entrepreneurship teaches you to be a better networker
It is no secret that the people with the most security are also the best networkers. This is because 90% of jobs are not advertised to the public, which means that the professionals who know the most people get first dibs on the least competitive jobs. Less competition combined with personal connections makes for a short job-hunt.
It is also no secret that entrepreneurs have large networks out of necessity. Entrepreneurs have a knack for building strategic alliances and using quid pro quo to come up with scrappy, workable solutions when faced with misfortune. As such, the real learning that comes out of entrepreneurship is not actually how to run a business; it’s how to build a network that helps you reach your goals.
So if your long-term goal is security, entrepreneurship is actually a good career route to consider. The fastest way to get a job is to become a great networker. And the fastest way to become a great networker is to become an entrepreneur.