After Michele Free was laid off last year, the 45-year-old technical writer struggled with a long, painful job search.
The Colorado Springs, Colo., area where she lives had been inundated with newly laid-off technical workers. As the months passed, Ms. Free grew frustrated and scared. "I just always thought I'd have a well-paying job," she says.
Finally, she decided to pursue a long-shot idea she had been quietly nurturing for some time: starting an online literary agency. Passionately interested in literature, she had previously helped several writing friends find publishers through networking and link up with other contacts she had made in writing workshops (and written two unpublished novels herself). Since she wasn't finding work anyway, she figured she might as well bet on something she truly cared about.
Almost a year later, Ms. Free has nine clients on contract, has sold a fantasy trilogy and a Civil War history book and says she is much happier. The money is hardly rolling in; she pays expenses out of some technology shares that are valued at about $130,000 (down from $1 million before the market crash) and by selling food grown on her property. "It's a long shot, yes, and we're worried every day, but we're putting all our eggs in this basket," Ms. Free says. "I believe this is what we were meant to do."
With nearly three million jobs cut in the current recession and job searches averaging longer than they have in decades, some frustrated layoff victims have risked starting their own business, often by investing their severance or savings. Many likely will fail. Small businesses face long odds even in good times, and last year the estimated number of small-business closures, 584,500, exceeded the 550,100 start-ups, according to the Small Business Administration, a public advocate for small-business interests in Washington.
Yet many entrepreneurs insist the bet is well worth making. Some see entrepreneurship as a declaration of independence after years of working for others. Others say they have simply lost faith in the job market after months of fruitless searching.
"It's easier to find a client than it is to find a new job," says Mindy Yang, a 27-year-old from New York who launched a publicity and marketing firm, Dolce Vita LLC, when she was laid off after the attacks of Sept. 11, 2001. She admits to feeling discouraged at times, and has nearly depleted her $18,000 in savings, but says she prefers to struggle with her own business than accept a full-time job "as someone's assistant. It has been rewarding in so many ways.''
For Carolyn Smallwood, laid off in 2002 from her six-figure job as supplier-diversity manager at ADC Telecommunications Inc. of Minneapolis, the start-up route made the most sense once other jobs didn't materialize. "I just needed to get my hands onto something immediately," she says.
A fitness buff, the 46-year-old Ms. Smallwood decided to open up her own women's gym, by purchasing a local franchise of a national chain. To open the gym, Ms. Smallwood had to take out a $55,000 bank loan, substantially adding to her debt load. "I was always a risk-taker in my professional life," she says.
Ms. Smallwood doesn't view the gym as her sole future moneymaker. She calls it "a side thing, an annuity for my children," and continues to seek another full-time job. Still, between running the business and attending networking events and job fairs, she has gotten worn out. "It's amazing that we've been able to sustain all this pressure," she says. "Even though it's risky, it cost enough and may not pan out, it has been a blessing to so many women."