Getting laid off from work can be one of the worst things that can happen to you. Or it can turn out to be a blessing in disguise.

When DarLa Johnston of Sackville, Nova Scotia lost her job with the Department of Community Services, she says it seemed like her workmates were more upset than she was. Her attitude was: everything happens for a reason. She used the layoff as a sign that she should indulge her entrepreneurial dreams. Today, she’s operates a busy laser hair removal business, and she couldn’t be more happy with her situation.

In Johnston’s case, she was able to secure more than $50,000 in government loans from two separate federally funded agencies.

Better than a loan – how to earn an income while you start your business

But there’s even better news for those with entrepreneurial dreams who find themselves out of work. The government will actually help people in this situation get their businesses started, providing funds that you don’t have to pay back. And getting involved with this program opens doors to additional financing opportunities down the road.

When Jessica Buchanan was laid off from her book store job, she sought out a program she’d heard about through Human Resources and Skills Development Canada. The Self Employment Program (SEB) would top up her Employment Insurance for a year, while she worked going after a dream she’d had for some time – starting a skin care botanicals company. It was the equivalent of thousands of dollars in grants.

She got her company, 1000 flowers off to a good start in that first busy year, starting with a line of essential oils, which are the chemical constituents that give a plant fragrance and medicinal properties.

At the end of the year, she wasn’t yet able to completely go it alone, so she went back to work in a health food store part-time, working every spare moment at her . During this period, she developed the Body Bar, which she describes as “a solid massage oil”. The cocoa butter bar is made of natural ingredients, and melts at body temperature as you rub it on. It has become her best seller, and helped push her closer to self-employment.

As sales grew, Buchanan looked for additional financing to help drive her growth. “I initially tried to apply for a line of credit through my bank, and they turned me down,” she says. “Community Futures helped where the banks wouldn’t.”

She received a number of low-interest loans through the federally funded program. These loans, in the $2000 to $4000 range, helped her build up inventory and buy the equipment she needed to manufacture and package her creations.

She stresses how valuable the government programs can be to other young entrepreneurs. “They guide you. They teach you how to apply and show you all the hoops you need to jump through. They make you do this, so you learn whether you have a feasible idea or not… whether you’ve thought of everything.”

She took a free, three-day workshop on writing a business plan and applying for a loan, and she says there are many other workshops available for people who want to get started on their own.

Layoff strategies lead to entrepreneurial success

Savvy entrepreneurs who are aware of the programs can take advantage of them when they’re ready, rather than scrambling when they receive the dreaded pink slip.

Seasonal workers are prime examples. Greg Lott worked in the tree care industry in the Picton, Ontario area, and took advantage of a seasonal layoff to apply to the SEB administered by the local Trenval Business Development Corporation. By the time the six week program was through, he was his own boss, already building a client list and newly armed with a $10,000 loan from the Trenval BDC to buy equipment.

The SEB program he took helped entrepreneurs learn the ropes of running a business, while the students continued to collect EI benefits. “With my diploma in Urban Tree Maintenance, a provincial accreditation in arboriculture, experience in the trade and the desire to become self-employed, my own business was in sight,” says Lott. “The question was, how do I make it a reality? I didn’t have the how-to knowledge to run a business.”

The course gave him that how-to. “I was able to learn the tools of the business, understand the marketplace, and find out whether or not the area could handle another tree service company.”

As part of the course, Lott went door-to-door, learning about people’s tree care needs and narrowing down his prospects’ demographics. “I found out that many people bought their property because of the trees on them and were concerned with their well-being. Also, people were afraid of losing their trees and didn’t know they could be saved through proper maintenance. This was just what I’d hoped to find out.”

The market research had the side-benefit of lining up potential customers. Within days of completing the course, he was ready to start going after them. Of course, there was the issue of equipment. “The banks didn’t want to have anything to do with me,” he says, but he learned he could get a loan through the Trenval BDC. The $10,000 helped him buy a truck and a stump grinder. He also invested about the same amount of his own money.

Randy Cook’s boss put him on the track to what would become a busy motorcycle riding school – Cyclelogics. The manager of the lumber dealer Cook worked at recognized his potential, and when he knew he’d have to cut some staff, he decided to give Cook a head’s up. “He said ‘Randy, you’re a bright guy; you’ve got a million things you could do,’” says Cook. “‘I’ve got people here who are limited in their skills. So I’m going to lay you off. Because I know you can do something else, but I’ve got to hang on to these people.’”

He gave Cook six months to figure out what he wanted to do, and as soon as the layoff was official, Cook was eligible for the Self Employment Program (SEP) administered by Sun Country Community Futures.

Under the program, which is a federal government initiative, Cook received business training while being paid Employment Insurance benefits. The program allowed him to develop a business plan and his consultants helped him focus on the skills and goals needed to succeed.

“The SEP was just tremendous,” says Cook. “It was a really great way to get the business up and rolling, no pun intended. I learned to have confidence in myself, and the accounting/business planning aspect of it really put things into focus and made it realistic. I was able to say, here’s my two-year plan and here’s my five-year plan, and the neat thing is, I pretty well stuck to my plans.”

Sidebar:
Tips for budding entrepreneurs

Many entrepreneurs advise that you work at starting your business while employed. With self-employment initiatives from the government, you can really leverage your chances. If you’re already unemployed and not finding work in the field you want, you may already be eligible, even if your benefits have run out. If not, get whatever job you can in the interim and begin to lay the groundwork.

While you’re employed:
1. Work on your business idea as much as possible.
2. Start a savings plan directed at the business, putting aside a set amount each paycheque.
3. Build your credit rating by borrowing, paying back, and being a good credit card customer.
4. Depending on your relationship with your boss, discuss your plans, and time a layoff to work for you.