Preparing for Unemployment

Many are losing their jobs these days. And what is lamentable, most of these people were caught surprised. With no alternative income source, and the scarcity of jobs available making it worse, they are clueless.

While you are still comfortable with your current day job, here are some thoughts you might want to consider to prepare yourself for any possible unemployment:

Franchising

Instead of starting your own small business, you might want to consider the better alternative of franchising. According to Franchising for Dummies, franchising is defined as:

…when a business (the franchisor) licenses its trade name (the brand, such as Wendy’s or Midas) and its operating methods (its system of doing business) to a person or group (the franchisee) who agrees to operate according to the terms of a contract (the franchise agreement). The franchisor provides the franchisee with support and, in some cases, exercises some control over the way the franchisee operates under the brand. In exchange, the franchisee usually pays the franchisor an initial fee (called a franchise fee) and a continuing fee (known as a royalty) for the use of the trade name and operating methods.

IMO, this by far one of the best ways to start your own business. But don’t just dip your fingers into this if you do not have sufficient franchise information.

Semi-retirement fund

Set aside a portion of your current income for semi-retirement or temporary unemployment. Ideally, a savings that is worth a year of net income is ideal. However, a six-month worth of income is okay. This fund should only be used when you hit the road unemployed and you have used up your post-employment money.

Business Start-up Capital

If you have a good credit standing (I suggest that you keep it that way), getting a small business loan is easier. Although in times like these, interest rates are usually high. Still, the best policy is that you save for this. This means thinking on a long term basis. Your 401k or other retirement benefits may be put aside for this.

Home or Small Business

In a recession, these throngs of small businesses are the lifeblood of the ailing economy. You might want to start stocking up yourself of some information on small or home business that you deem has a higher chance of success rate during a bad economy. Get the skill required. Read books and trade magazines.

Recession or not, in my mind, we should always be prepared for the inevitable. In a recession, job security is a ‘myth.’ When sales are down and overhead expenses are high, the company will either close shop or retrench its employees in order to survive. Where this does leads you if you are not prepared?