Fired tech professionals are launching their own businesses — and competing with their previous employers

Could the coming months and years bring a new boom in business energy and technology-driven innovation to the economy? Many tech professionals, fired or feared for it, are exploring more business options instead of choosing standard full-time jobs. Of course, the majority of that could be “independent entrepreneurs” related to freelance work or independent gigs, but it’s worth noting the uptick in new company formations.

According to a statistic, 63% of tech workers reported that they founded their own company after being laid off, according to a recent report. survey of 1,000 professionals laid off during the pandemic years, published by Clarify Capital. Most of these new ventures, 83%, are in the technology industry.

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And here’s the interesting part: 93% report that they are now competing with the company that let them go.

There has been a notable jump in startup activity, with Accelerator Y Combinator, the tech startup incubator, reporting a 20% increase in startup applications in 2022 and a 5-fold increase in January 2023. compared to the previous year, like report by Aran Richardson in Yahoo Finance.

“Often the most challenging times lead to the most creative ideas,” says Zaven Nahapetyanco-founder of Niche.club, and a former technical manager at Facebook. “We are simultaneously witnessing both incredible technological progress, through decentralization, AI, and virtual/augmented reality, as well as profound social and cultural change. The combination. This creates countless opportunities for new businesses.If you can take the risk and join or start a new business, my advice to you is to go for it! Which is better to do, and who knows if you will have similar abilities in the future.”

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Of course, starting a company — or even joining a startup — is fraught with risks and shattered expectations. And, yes, even some startups are said to have cut back, but in general, tech professionals who go this route tend to get higher income and job security. Experts who responded to Clarify Capital reported an average $13,000 increase in annual earnings and 58% felt better about their new job security.

Tech professionals don’t necessarily launch their business the day or week after being laid off — a third start within the first six months, while 40% make the move from six up to 12 months later. And nearly all are bootstrapped, with professionals investing at least $20,000 of their own money to get started.

Industry observers agree that tech professionals have the skills and vision to lead the next generation of innovation, but recognize that starting a startup also requires an understanding of the business. business, “If you have a unique idea or what you think is an unmet need in the market, then by all means, go for it,” says Mike Jaruschief architect for internal. “You still need to be rational and realistic, though; get-rich-quick schemes fail more than they succeed. It takes a lot of work. But if you have a great idea, if you do it yourself believe in your abilities and if you can stay grounded in practice, then you should go ahead and try.”

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Industry observers offer the following advice to professionals taking their first steps into entrepreneurship:

Hot expectations. One expectation that needs to be lowered from the start is that there will be no overnight success — rather, it will be years of organization building and followers. The majority of professionals in Clarify Capital’s survey, 82%, reported that they did not acquire a client until at least four months into the business. “Building a successful startup takes years and most will survive both the ups and downs in the labor and financial markets; this is normal and expected,” says Nahapetyan.

Ask yourself what business you want to run: However, business-oriented tech professionals need to double-check their plans, as this is a very crowded and noisy market. Q: “What problem am I here to solve?” “What needs does my business meet?” And perhaps the hardest test is: “Can I explain my business to family and friends?”

Realize that launching a new venture often requires partners with additional skills. “Running a business is not like coding, managing data, automating deployments, or any of the other jobs we do as technologists,” says Fritchey level, DevOps support at red gate. “Besides looking at business opportunities, you need to look at partners who can help you in business and sales. No matter how great your technology and your idea, if you can’t manage the people needed to deliver, and then sell the idea to people, you’re not going to succeed.”

Consider how it will scale. Scalability is what sets an entrepreneur apart from an independent entrepreneur. “While this is a promising time for startups and SMEs, founders and team members need to start prioritizing and planning early on their most effective processes. them to grow the company successfully,” he said. Gabe Monroyproduct manager at DigitalOcean. “Scaling a business requires complexity, and no matter how much money founders raise or the talented staff they bring to the table, these ventures can start to grow. start faltering if they don’t adopt efficient and scalable methods, this includes building infrastructure that can adapt to changing demand, controlling cash burn early and focus on initial needs as well as customer feedback.”

Whether it’s a gig or a full-fledged startup, many tech professionals realize they have the valuable skills — and ideas — to power today’s digital economy. . Standard employment may not always be the best way to bring that talent to market.