Down times spark start-ups

Too often, Henley finds, people lack an objective view of their business. "They fall in love with their own idea." Some also have a poor financial understanding of the potential business.

"You've got to be willing to invest time and money," Malski says. "You really have to understand what the cash requirements are going to be. Only when you know those numbers can you put a plan together to get them."

Cash requirements once played a critical role for Andrea Stenberg of Owen Sound, Ontario, Canada. After being laid off four years ago by a nonprofit organization, she created her own business as a copywriter, writing marketing materials for small and medium-size firms. Eventually she moved into a coaching role, helping entrepreneurs learn how to do their own marketing.

Although Ms. Stenberg's initial costs were low – she started with her existing computer and Internet access, a business card she had printed at Staples, plus a website she created from a template – she faced the challenge of inconsistent cash flow, particularly in the early months.

"I had a moment when my unemployment insurance ran out, and I didn't have enough money coming in to pay the mortgage," Stenberg says. "I had to make a decision. I called the bank and asked them to cash in my retirement fund. When I got off the phone I sat on the floor and cried. It was scary. But that was the moment things turned for me. I'd put everything I had into this business and became more daring. Being more daring is what's led to my success."

But even daring has its limits. Individuals must also be sure they bring the right talents to the business, Henley says. Their venture also needs a measure of uniqueness.

"Make sure you're going to get into a business you're passionate about," Malski says. "Start-ups are tough, with long hours. You've got to really love it. You're going to have to do a lot of things you're not used to doing. You need to be ready to get down in the trenches."

That is particularly important for those coming out of corporate America, who have been accustomed to relying on marketing, advertising, accounting, and human resources departments. Now they must get that help on their own.

When Consuelo and Jeff Bova of Tampa were laid off within months of each other from a financial-services company during the last economic slump in 2005, they decided to start their own business, ForTheFit.com, an online short men's clothing retailer.

Their challenges included isolation from friends and family who did not understand their choice, sacrifices in their lifestyle and personal budget, and fear about needing to return to the mainstream workforce.

Even so, Ms. Bova says, "We have never looked back and are thrilled with the rewards of our choice." Those include economic freedom and self-determination, a better work/life balance, and enhanced professional skills.

Stenberg's rewards include being responsible for her own success and being able to work around her son's school schedule.

Judy Lawson, president of TLC Staffing in San Diego, started her company in 1985 after a layoff. "The challenges are huge," she says. "Be prepared for that, but don't be so intimidated that you lose your nerve. The three things you will need, along with your very well-designed business plan, are a good and trusted banker, a good and trusted lawyer, and a good and trusted accountant. Plus a lot of faith in yourself and a bank account that's seemingly at times bottomless."

Undaunted, an optimistic Bender notes that his photography business will be the career he takes into retirement. "My layoff has given me the opportunity to go after this much sooner than I most likely would have had things remained the same," he says. "Working on my own is incredibly rewarding. I couldn't be happier."

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