Transition to business owner full of unexpected challenges

With employers cutting thousands of jobs each month amid a slowing economy, many downsized workers decide to start their own small businesses. The transition can be daunting as these new entrepreneurs contend with challenges many never faced before.

Starting his own business punctured a few of the myths George Stahl had heard. "A lot of people think that if you own your own business, you can set your own hours. I think that's the biggest falsehood you run into," he said.

Stahl started a construction and contracting business in Troy, Mich., a few months ago after losing his job running a program to teach business to inner-city youths. Like many other new entrepreneurs, Stahl discovered that he has to do a variety of tasks that, while integral parts of owning a business, are peripheral to its core operation. Running GCS Enterprises means he's the company's main salesman, lead installer on many jobs and accountant. He's in charge of payroll and billing.

"It's a time-management thing, where my job is no longer 9 to 5. When I wake up in the morning, I'm working," he said.

Stahl also said it has taken some adjustment to get used to the absence of a steady paycheck. "I'll complete a job, and a lot of times, it's 60 to 90 days out till I get paid for it," he said. "It's definitely taught me to budget wisely."

But that's not to say there aren't great joys and rewards from starting up a new company so soon after being laid off. "I've been able to help out a lot of people as well," he said, noting that he has hired friends and acquaintances who also were laid off from white-collar jobs. "They're keeping their houses, their cars. They're not worried about what the next day is going to come to."

Many new entrepreneurs feel the stress of waiting for the business to take off. But sudden, unexpected success also can mean plenty of worry.

T. Shawn Taylor expected the process of starting a business to take some time, so she fired her nanny after she was laid off from the Chicago Tribune at the end of 2005. But just a few weeks later, she was so busy with freelance work that she had to scramble for child care.

Her business, Treetop Consulting Inc., is a writing, speaking and communications firm. "The challenge is handling so many different clients. I do so many different things," she said.

Taylor has so much work that she's thinking of expanding and taking on help, but the idea "keeps me up at night sometimes."

"I really want highly skilled people who are ready to go," she said. But the people who would be her first choice already are working in journalism. She has considered hiring interns, but, "I don't have time to get somebody up to speed."

Taylor has run into another challenge that many new businesses face: managing cash flow. "I did work and waited for people to pay me. It was frustrating," she said. What she learned to do was have some clients, especially small businesses that were new clients, pay her in advance. She bills some of her larger clients every two weeks.