People who start a business after being laid off need to manage their emotions as much as their finances, an expert says, in the wake of a Federal Government forecast of a rise in unemployment.
Around 40,000 Australians are expected to lose their jobs over the next six months, in light of the government’s announcement that the unemployment rate is tipped to jump to 5.5%.
Unemployment is expected to stay around that level into mid 2013, the government says, due to a slowdown in growth and the strong Australian dollar, hurting industries not related to mining.
Peter Strong, of the Council of Small Business of Australia, says a spike in unemployment could prompt more people to start their own businesses, particularly if they receive a payout.
“We hear from people who say, I’ve got half a million dollars. Here’s my opportunity to do my own thing,” he says.
“It’s a very exciting time – it’s wonderful they think that way – but be careful with your money.”
“A payout package can be wasted trying to do a business that’s not going to work… [For example,] do not start a shop in a shopping mall.”
In addition to layoffs in the retail sector, Strong says there could be an increase in job cuts in the public sector as governments look to reduce spending.
“In the public sector, I expect there will be some retrenchments, not just in Canberra but state governments as well,” he says.
“The other area is banking – we will start to see retrenchments happening in the banks.”
Strong says former government workers who decide to start a business, thus making the transition from the public to the private sector, need to “be mindful of their own excitement”.
“They often come out of the public sector – in which they feel they can’t express their true beliefs – and get so excited [about the prospect of starting their own business],” he says.
“They need to control their excitement and use the skills they learnt as a public servant to look at the fine detail [of a business opportunity]. It’s about managing emotion as well as finances.”
Strong encourages people to visit business enterprise centres and government websites, and consult an accountant beforehand.
“A lot won’t go and see an accountant but they shouldn’t be afraid because they’re not that expensive. Often, they give the first bit of advice for free,” he says.