How many Lehman employees do you think have backup plans?

My heart broke as I watched dejected Lehman Brothers employees carry their personal effects out of their offices on Sunday.  As much as they were aware of strain in their company, if they are like typical corporate employees, most did not expect the bankruptcy outcome.

I was so fascinated to see this right as I am polishing the chapter of the Escape from Cubicle Nation book on why corporate employees are afraid to leave their jobs to start a business.  A very common concern is that their "cushy" situation is as good as it gets, and they would be foolish to leave the "stability" of a corporate job for the "uncertainty" of entrepreneurial life.

I would bet that those Lehman employees who had small gigs going on the side:  consulting projects, eBay stores, blogs w/ad revenue, niche products, are feeling a little less panicked this morning.

The New York Times said yesterday (my paraphrase) that now might be a crappy time to leave your job to start a business. (must register to read). (hat tip to Carlos for referring this article)

Yes, things feel quite bleak in the market today.

But, I would argue, if you are sitting back with your head between your knees gripping your corporate job like a favorite teddy bear, you are putting yourself at risk.

I learned from my martial art days that the safest thing to do when under attack is to keep your eyes wide open, ground yourself, leverage your strengths and let curiosity, not fear, be the emotion your opponent sees in your eyes.

Like in any crisis or economic downturn, some people are going to thrive and grow despite the chaos. These are the people who are not afraid to try new things, work on side projects, network like crazy outside of their day jobs, and maintain a balanced and positive outlook on life.

What position are you in, feet firmly planted on the ground with your eyes wide open, or crouched in your chair waiting to see what will happen to you?

photo credit:  Reuters

Comments

[Pam McAllister]

When I read that NY Times article yesterday, I had a moment of panic and self-doubt. *Did* I make a huge mistake leaving my seemingly stable job for the "uncertainty" of being on my own?

Thank you for the reminder that the answer is in me, rather than in the circumstances.

Hey wait a minute: That's what I teach! How come it's harder to remember when it's applied to oneself?

Pam

---

That is why we all need each other Pam!

NOTHING is forever. And even though things are tough, think of all the options you now have to make money and add value!

You have tremendous talent that is needed, and you will do fine.

:)
-the other Pam

[Helene K.]

With health insurance so high, I expect I'll never be able to afford to "go out on my own" and thus will always have to find a position with a company that offers health insurance benefits. It doesn't help that I live in California either :-/

Great blog, will look for book, and follow you on twitter :)

[Jennifer Louden]

I had the same reactions reading those stories and am thinking a lot about writing a comfort book for fearful times ... we all need it, me most of all!

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Jennifer:

You are so right -- if ever there was a time when we needed your "comfort queen" magic, it is now!

I don't mean to sound like an unfeeling investment banker about it, but dang, your business should be booming right now! So many people are craving what you have to offer, and with your guidance, they will not be stuck in fear and can take positive action.

I say get to the book pronto! :)

Can't wait to read it!

-Pam

[John]

Like others who have commented, I have the interest in going out on my own, but feel strapped by health insurance. I have a family member with chronic illness, and I don't see an alternative to a big company group insurance plan. I've heard so many times from small/medium companies how their carrier dropped insurance (or renewed at very high rates) because one person got sick...

[Jen]

Exactly ... the ONLY reason I don't have my own business? Health insurance. And that it costs quite a bit to be a small business owner in my state, on top of that. The health insurance issue in this company is a major issue in this country and truly holds back a lot of talented people.

---

Wow, Jen, and all those worried about health insurance. I am curious, have you really researched to see all the options for self-employed people? The National Association for Self Employed (NASE) has some plans, as well as many companies. I totally get the pre-existing conditions problem. But I wonder if with some research you could find good option.

I'm writing about it for chapter in book -- stay tuned!

-Pam

[Barbara Saunders]

I'm gradually moving towards the position that we're not just in a post-job world; we're in a post-one-prong-strategy world. Of course there are people who are more suited for jobs, others for operating businesses, others for solo professional practice, etc. However, it seems to me that those of us in our 30s, 40s, and 50s may be dealing with fairly unpredictable cycles for the remaining 20-30 years of our working lives.

Who's to call that Olympic business a "failure" at all? I see a woman who supported herself for X years with a business, now has a job, may have another business in the future, and so on.

My take: I'm preparing myself by cultivating mastery in WORK (content) I love. Then I may do it in stints of employment, stints of freelancing, consulting, small business ventures that may have a beginning-middle-end, or many of those at the same time.

Re: insurance. I think people who haven't faced it don't understand the magnitude of this problem. NASE, for instance, is the subject of investigation and class action suits for limiting benefits and some sketchy practices. I don't think it's fear that's keeping people stuck around this issue - especially those who are either unmarried/domestic partnered or who must be the family benefits provider. It's one thing to buckle down and earn $60K from a business rather than $100k from a job. Factoring in included benefits vs. $1,000-$2,000 per month for lesser benefits can be a REAL show stopper.

"Insurance be damned!" may be the way around the "fear", but this is a real future-jeopardizing risk, not a psychological one.

---

Barbara:

Don't get me wrong, I totally acknowledge that health insurance can be a big show stopper. I do not believe in just using the power of positive thinking to overcome a systemic challenge, because it really can be hard to manage for families, or those with pre-existing conditions.

That said, I do know that there is a lot of information about there now about how to make health insurance work for you. And, the trend is for companies to provide a smaller and smaller percentage of insurance coverage to employees. So it is something worth checking out.

I do not have the prob w/preexisting conditions. When I was single, I paid about $140-160/month for decent coverage. Now for my family of 4, it is $700/month. Not perfect, but not bad either.

I advise people to put the real costs in their business model before making any kind of stay/go decision.

And ... I like to challenge people who have only heard "health insurance for the self-employed is expensive" to check it out for themselves, factoring in their personal scenarios.

Too bad we can't all be Canadian! :)

Thanks,
-Pam

[Colleen Wainwright]

Pre-existing conditions really do kill the deal. I was told flat-out by two different insurance brokers that with two pre-existing conditions, I was uninsurable as an individual. I'd have to form a corporate entity with at least one other person and buy group.

It's through-the-looking-glass nuts. Me alone = uninsurable; me + another body housed in a corporate entity = insurable. And that person can opt out of "our" group coverage!

I admit that I was one of the blithe few who didn't see the big deal about insurance until my Crohn's onset. Now, paying $545 for crap coverage through the State of California (and damned grateful for the privilege), I get it in a big way, every month.

[Alexis]

That article was very depressing, but very similar to messages I've been getting since I started getting that entrepreneurial itch. Pam, are you coming to the BlogWorld conference in Vegas? I'd like to meet you, if so.

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Wish I were going to Blogworld Alexis, but book duty calls. Next year! :)

-Pam

[Steve Roesler]

After 30 years as an incorporated entity, I still sometimes lapse into "if only someone else paid my health insurance" mode. It's a real need, a real consideration, and insurance companies make it difficult for those with pre-existing conditions. Because of where I live, I pay $650/month just for my own (self) coverage.

Having said that, I've spent nearly 30 years building a practice I love (not just "like"), traveling the world to work with clients and taking my family with me, and living a life that I could not have lived had I stayed "inside."

Economic cycles do impact my business, so I've had to learn to better plan and save for those. And even though small businesses are the growth segment in the U.S, in many places we receive the least economic support and tax relief.

All of that said, the question to ask is:

"What kind of life do I want to have and what am I willing to do to have it?"

Weigh the risk/benefits, look at the non-negotiables in your life if there are any, and put your stake in the ground.

The CEO of Lehman received a $22 million bonus this year. His financial future is secure. Those carrying boxes out of the building might be re-thinking the "security" of big corporate life. If there is no longer a corporation, there aren't any benefits.

--

Wonderful response Steve!

I just got really nauseated when you said the CEO got a $22 million bonus. That should be a crime.

Thanks for taking the time for such a thoughtful response.

-Pam

[Steve Roesler]

Pam,

I forgot to mention how eager I am to see your book and the launch.

Your updates have really lit a spark under me. I've used the excuse of being too busy with clients and speaking engagements to sit down and write a couple of the books I've always thought about. You've helped me see that it can be done by someone totally busy, and I appreciate that!

--

Aw, Steve thanks!

Actually, what my posts and tweets say is that a person with a big task at hand sure can waste time while appearing to be helpful and productive!

Honestly, tweets keep me sane, and blog posts are tonic for my soul.

I am excited by the book, and really overwhelmed by the task. Bird by Bird, as Anne Lamott says! We need your book! Write it (them)!

-Pam

[Mario Sanchez Carrion]

My guess is that most Lehman employees didn't have any back up plan. The irony of the whole thing is that a few years ago, these same employees in Lehman and other over leveraged investment banks were getting rich by paying themselves huge bonuses, for doing nothing more than riding the coat tails of a bull market.

But just as leverage works wonders when things are going up, disaster strikes when things start going south. I feel more sorry for the stock holders that lost their equity than for the greedmeisters who created this mess, and who now have no choice but to clean up their desks and sell their Mac Mansions and yachts at bargain basement prices.

On another note, judging by the comments, the issue of health insurance arises again as probably the biggest reason why most people don't take the plunge. I believe the insurance industry will have to start paying attention to this new market as more and more people are laid off.

Good luck with your book and let us know when can we pre-order!

[Matthew Cornell]

I do feel for those folks. I think the illusion of safety is just that. As challenging (AND exciting) leaving my employer was, I cannot ever imagine going back. Also, as up-in-the-air as it is, I feel much more agile and flexible. If it didn't work out, I'd be very disappointed, but I'd also feel much more capable of handling the next thing, and *creating* it as well.

[James R]

Fortunately in Australia we have semi free health care.

I remember 7 years ago, the day I was made redundant, one of my bosses said something along the lines of 'one day you will look back on this and be thankful of this opportunity'

At the time my inner voice was wondering how many times I could punch him in the face before people pulled me off him but the fact is that, regardless of the timing there are always opportunities for people with the guts to give it a go.

Sometimes these events provides the necessary motivation to act

We delude ourselves that a large company provides safety when really we are just a vulnerable to a company collapse, a new CEO who doesn't think what we do is part of the 'core business' or wants to outsource the work to another country.

Good luck to all affected by the current upheavals

Now might be your time

[Karyn Romeis]

For reasons totally unrelated to the current economic crisis, I have been pushed into a position of self-employment. This Friday is my last day on the job.

I alternate between excitement at the prospect and blind panic because of our large mortgage and the looming prospects of university educations for my children.

Everyone who knows me assures me that I will be successful at it. I wish I knew what they base their confidence on, since I haven't a clue how to go about this. I'd like to bottle that confidence so that I can sip it in my moments of low ebb. I only hope they're right!

[jkh]

most folks in lehman do have backup plans. or - to say the least - the right attitude and education - and the cash - to take some time off and travel the world and to see what other opportunities come theit way.
it is those folks that in the last economical meltdown were kicked out of their positions in investment banks and started to work for NGOs or picked up the sport of polo in argentinia or somewhere else, or did whatever their curiosity drove them to do.
-
do not forget: those at lehman are our smartest and brightest. - they are all hard hitters and they know how to take as well.
-
the kids are alright.

[Steve C.]

That's a lot of small businesses hitting the ground at the same time, with most of them needing to borrow money to capitalize, in a very restrictive(almost non-existent) capital environment. It's kind of like trying to sell a house when everyone else is trying to sell out of a bad market. A huge paranoid inertia takes over. The only winners in a major economic re-alignment with reality will be the people with money, guts, and brains... mostly with money. As usual, cash will be king. I drove by the Lehman Bros. campus this morning dropping my kid off at school in Menlo Park. It was like a funeral home, a very big funeral home. I'll bet this "not a recession yet" shakes even this unshakeable peninsula area to it's core. Wish we had rented instead of bought. We're trapped now.

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Wow Steve, amazing to hear about the Menlo Park campus.

I remember the exact same scenario in 2000 in Cupertino after the crash. I had many clients along a main freeway corredor (forgot the name, been in Phoenix too long!), and I will never forget looking at parking lots that were formerly full of BMWs and Porches and seeing them empty. It was very disenheartening time.

On the upside, look what happened -- some technology startups survived, and went on to build some great apps.

I agree that not everyone can start a brick and mortar biz which requires lots of capital. Even some simple consulting or other activities can help with cash flow, even if people are looking for other jobs.

And I hear you -- cash is king in a downturn. Without it, it is VERY hard to survive.

Thanks for your comment.

-Pam

[Steve C.]

JKH, if all those at Lehman are so smart and bright, how did they end up in this situation? Your attitude that everyone just goes ho-humming off into the world, travelling and playing beach volleyball says a lot about what is wrong with the sorry state to which capitalism has fallen. Smart and bright has replaced wisdom as the most highly valued human capital quality. I suspect that this reality check will bring other things to the table.

[Steve C.]

Pam. Hope springs eternal, eh? I'm worrying about how all the VC's around here will fair in this environment, since they provide much of the fuel for the startup engines of Silicon Valley. I sure hope we don't go through another meltdown like the one you described in Cupertino in 2000. I know that the Fed and every policy maker in Washington is working overtime and sweating bullets trying to stop a disaster from happening, but the House of Cards/Domino analogy is looming away out there. In economics, nothing happens in a vacuum, and in reality, the Fed is not all powerful. You can lead a horse to water, but you can't make it drink. Same logic applies to banks and lending. Lets hope that raw fear doesn't take over, and that the collateral damage doesn't take down too many innocents. On the bright side, look at the price of oil. Makes you wonder how much oil was being stored in paper tanks, doesn't it? When stuff like this happens, it needed to happen, I think.

[jkh]

fully agree steve. – but the individual players in the banks – those who lost their job this week – they will just do the same thing they did last time: surf through the crises on a sunnier beach.
these kids are alright. – what is questionable – and I fully agree with you – is the overall system. – but this has little to do with individual survival strategies and tactics.

[Steve C.]

Hope you're right, JKH. It's a much more uplifting picture than the one I imagine. Here's hoping the housecleaning does us all some good. Cheers!

[Shannon]

Ugh, I had those same thoughts right after hearing about all the Lehman layoffs. Or even the HP layoffs?

I left my corporate job 2 months ago to help my husband open a business. It has been a full-time job making no income (we're not "live" yet) but we are enjoying every minute. Ok, that's a lie. Some mornings I pace around in my pajamas worrying about our savings account. But I'd rather have that anxiety than the anxiety of knowing every day I have to go sit in a cube and work for someone else.

My only worry is that if the business isn't profitable, i'll have to return to the job market with a grimace and a wrinkled resume clenched in my fist.

[Steve C.]

Hang in there Shannon. At least you're still sleeping through the night, right? The difference between entrepreneurs and workers is, entrepreneurs are willing to take a chance, to take a risk, with their OWN money, not someone elses. There is a huge difference between making money and earning money. Good luck!
Steve C.

[Megan T.]

Hi Pam,

This was a particularly interesting post for me. My coaching practice is in Detroit, and our local economy has been in a significant slump for years with the shift in manufacturing jobs/turmoil in the auto industry. I often hear people use the "Detroit" perspective, similar to the "crappy time" view, to explain how they can't make changes in their work lives. It becomes so overwhelmingly powerful for them. It is truly transcendent to see another human realize that "Wow, I can control my own life!" and what that opens up for them. There will always be obstacles, it is how we dodge, scale, or obliterate them that matters.

Best,

Megan Thomas

[Ellen Hart]

I'm glad you wrote about this. It was very sad to watch. I'm more grateful now than ever, that I run my own business. This way I'm not at the mercy of greedy/poor executive management decisions.

[Steve C.]

Pam, amen on the greedy/poor executive management decisions. They're out there. Not unlike a sewage treatment plant, the really big pieces usually float to the top.
Steve C.