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Getting Started

After Layoffs, Starting a Business from Scratch

Sara Clemence (center) launched Recessionwire with Laura Rich (right) and Lynn Parramore a few months after getting laid off. JON WHITNEY

They're casualties of the recession: the millions of workers laid off as employers slash payrolls. With few companies hiring, a number—no data exists on what percentage—of the newly downsized have decided to start their own ventures instead of looking for work in an economy shedding hundreds of thousands of jobs each month. We reached out to dozens of "rebounders" across America, in industries from manufacturing to media, finance to health care, to see how they're turning their business ideas into reality. You can check them out in this slide show.

The unemployment rate, at 8.1%, is higher than at any point in the last 25 years. Nonfarm employers cut 651,000 jobs in February alone, and 2.6 million vanished in the last four months. Many are disappearing from companies that were titans in their industries, such as GM (GM), Yahoo! (YHOO), or the now-defunct Washington Mutual bank, absorbed by JPMorgan (JPM) in the financial collapse. Some workers cast off by these companies say even the risky venture of starting their own companies offers more stability than going back to work for someone else.

Tom Hodge, a 34-year-old journeyman toolmaker who spent 12 years at the GM assembly plant in Moraine, Ohio, decided to take a buyout when the plant closed two days before Christmas rather than put his name in the hat for a transfer. Watching GM chief Rick Wagoner plead for a bailout from Congress helped him make up his mind. "I don't trust the fact that they have any jobs for me at all. I feel like now I'm in a position to rely on myself," he says. He's starting his own machining business, Absolute CNC Machining, from a 1,500-square foot workshop in Germantown, financed in part by his buyout from GM.

Some in this new crop of entrepreneurs see market opportunities in the same trends that cost them their old jobs. Brent Schludecker, a 38-year-old chemist who tested Pfizer (PFE) drugs for compliance at the pharmaceutical giant's Terre Haute, Ind., plant, was let go a year ago when Pfizer announced the plant would close. Now, he and other colleagues have opened a lab to "do the same thing we were doing at Pfizer and offer it to the industry, " he says. Schludecker, who bought lab equipment from the closing Pfizer plant, intends to target food and pharma companies looking to cut costs by outsourcing their compliance testing.

Even in so-called recession-proof sectors such as health care, which actually added jobs in February, layoffs are spurring workers to start their own businesses. Maureen Molinari, a 44-year-old dietician and diabetes consultant at St. John's Medical Center in Jackson, Wyo., was devastated when she ways laid off in November. "I think I have a secure job, and all of a sudden, bam! It's gone," she says. Molinari, who long dreamed of making her own hours, now works as a nutrition consultant for individual patients and a rural hospital in Idaho.

Many of the newly laid off seek help from organizations such as SCORE or local small business development centers to get their ventures off the ground. Martin Lehman, a SCORE counselor in Manhattan, says he has noticed a substantial increase in people who have been laid off, particularly from Wall Street firms, coming for business advice. While a layoff is rarely welcome, he says, it can liberate some people to pursue long simmering business ideas. "Maybe they can make a living at it. It may be something that they really wanted to do anyway, and this is sort of a blessing in disguise," Lehman says.

That was the case for Patti Tower, laid off from her job as a director in IT infrastructure at UBS (UBS AG) in Stanford, Conn., after 11 years with the bank. Tower, 46, says she has no regrets about her time with UBS, but now she has the chance to pursue an idea for a nascent fashion business full-time. "I've been doing this for years and years and years," she says of her hand-painted T-shirts and embellished vintage items. "I just couldn't imagine that I could make a business out of it."

Tozzi covers small business for

Tozzi is a reporter for Bloomberg Businessweek in New York.

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