Wednesday, Jul. 1st 2009
Michael Sandys on how the rise in redundancies has increased the number of entrepreneurs setting up new business ventures
Workers are turning redundancy into opportunity as they use payouts to set up their dream jobs.
A Merseyside law firm has seen a dramatic rise since the start of the year in people seeking advice on setting up their own business ventures, using their redundancy money as capital.
Since January this year, Kirwans Solicitors have advised dozens of individuals wanting to use their redundancy funds for business start-ups.
In spite of the economic downturn, some people view redundancy as a “golden opportunity” said Michael Sandys, Commercial Partner at Kirwans Solicitors.
“Redundancy is often seen as a negative factor but for certain individuals it can provide the opportunity they’re looking for. It can give people the financial freedom to invest in a venture they have always been passionate about.
“I’ve spoken with a range of people who are setting up their own businesses, from senior banking figures starting their own consultancies to engineers investing in an entirely new sector. In each case, they’ve used their redundancy payouts to finance the new projects.”
However, investing in an economy with unemployment figures for May hit a 12-year high of 2.2 million people is a risky business, said Mr Sandys.
“If a new company is going to survive in the recession, people must be able to identify sectors that are riding out the financial storm. They need to invest in a unique idea, something that isn’t already flooding the market.”
“Investors also need to be aware about the legal issues surrounding shareholders, lease agreements and contracts of employment. People shouldn’t rush in with their eyes closed.”
Measures to encourage investment in energy efficiency, renewables and carbon capture initiatives were announced in April’s Budget, and Mr Sandys has seen an increase in people seeking advice in the sector.
“Investing in a sustainable future seems to be high on people’s agenda. It’s something that people are keen to address and want to set up in.”
Case study
Mike Brown, an engineer from Manchester was made redundant after 20 years working with the same company. A programme director for an American software firm, he thought his job was secure in the recession but when his office near Old Trafford closed this year he found himself without work.
“I’ve never been unemployed before, even when I was at school I had a job. At 16 I did an engineering apprenticeship and worked my up to programme director at multinational company,” said the 45-year-old.
“When I was told I would lose my job it was as though I was no longer a person but a number in a spreadsheet. I was devastated.”
Mike applied for “hundreds of jobs” but didn’t receive an interview for any. “I hadn’t written a CV in 20 years, it was tough going back into the marketplace.”
He attended an event held by Kirwans Solicitors where he met local councillors and other like-minded environmentalists. It was here that Mike altered his course and steered away from engineering and into the career path of a carbon emissions-reduction scheme.
“It took a while to figure out what to do, but once I went to Kirwans [Solicitors] seminar I decided on a new direction.
“I had to ask myself, do I want to continue in the software business and work for someone else, or do I want a new challenge? I chose the latter.
“A lot of people see redundancy as a huge setback and others see it as a great opportunity. I see it as half of one and six dozen of the other. I have a family to support but at the same time it has given me the chance to invest in a project that I’d never have been able to do otherwise.”
Mike decided to invest his five-figure redundancy package in a ‘green’ project. Alongside a previously self-employed contractor and another keen businessman, Mike’s new idea will be based in the North West and help reduce CO2 output and help lower domestic bills.
“The environmental industry is still in its infancy. Some firms are failing, others are successful. We’re currently identifying a new breakthrough approach in the sector. It’s not a ‘get rich quick’ scheme but it will help cut carbon emissions and energy bills.
Mike’s wife is supportive of the new venture. “When I lost my job she was distraught, but now she realises I’ve got a new chance. She doesn’t understand the ins and outs of the business model and is a little anxious of it, but at the same time she’s encouraging me.
For others in the same situation, Mike realises the decision is tough but an opportunity to reach “their dream” might not happen again.
“People facing redundancy have a lot more time to think. They will ask themselves, ‘do I want to go back and work for a boss for another 20 years or do something I’ve always wanted to?’ Now might be the best chance to try a new approach.”
For more information, please contact Jane Batchelor at Mason Media on
0151 239 5057.