The Impact of the Recession and Self-Employment

With a recession in the U.S. economy, many people are at risk to lose their jobs due to layoffs. And because of the impact of the economic recession, there is a good chance that most losing their jobs will not find another until something changes. Change might mean the person has to retrain for new job skills or opt for self-employment. If a person opts for self-employment, he or she must realize that the recession is impacting the independents too. Here are some suggestions for making a sustainable living if you choose the self-employment route.

Self-employment is a sensible alternative to living on unemployment compensation during the recession. Many will tell you that self-employment is risky and they are absolutely right. There is no such thing as the quick millionaire when self-employed. But ask yourself what choices you have. If you draw unemployment compensation, you will be limited as to how much you can make on self-employment. Plus, you have to go to the labor office and fill out forms and play their game. You have a better chance at making good money by choosing the independent route while you are looking for another job.

Look for jobs with quick turnaround. The idea behind choosing self-employment in a recession is to minimize the impact of loss of income. You want to look to do jobs that are not too big at first. Of course it depends on the line of self-employed work you are in but you want to do a job quickly and get paid so as to maintain the critical cash flow you need to keep going during the recession and minimize the impact of lost income during recession.

You might have to drop your prices in order to keep work flow. Many will recommend against this but sometimes it is the difference between no work and a lot of work at a lower rate. Most want to the latter. If you are going to be self-employed then flexibility is the key. See what your competitors are charging and see how it impacts your market. You can tell who is selling at their set price levels and who is not.

Insurance may be a problem. You can opt to enroll in your ex-employer’s COBRA health insurance coverage but the rates are extremely high. If you never use the insurance then it is like throwing money away. However, it is wise to have some sort of major-medical coverage in case of an emergency. Many self-employed individuals who carry their own health insurance are opting for much larger deductables and paying small fees out of pocket to reduce the monthly premiums. You still want to minimize the personal economical impact during this recession if you or someone in your family gets sick. Open up your local phone directory and see if you can find what are known as doctor’s co-ops. These are where private doctors get together and set up their own combined practice and charge rates that you can afford without insurance.

Have multiple streams of income and avoid debt. To minimize the impact of low sales in one of your products or services during a recession, have multiple streams of income. For example, you might be a landscaper and sell items on EBay at the same time. Remember to focus on what people need during a recession.