How to reinvent yourself after retrenchment

Practical lessons in Self-Employment from an unemployed retrenchee

Harness your previous working experience and skills to start your own business as this would guarantee long-term job and financial severity as well as personal gratification.

Your Retrenchment crisis can be solved through self employment. In recent years, retrenchments have become a common feature in South Africa due to the global economic recession.

 Retrenchment and the attendant loss of work-based financial security, identity and social support systems has profound and potentially devastating psycho-social effects on the retrencheè. Indeed, experience has shown that some retrenchees often suffer from a myriad of negative feelings such as uncertainty, grief, hopelessness and a depressed sense of self-worth which, if not handled properly, could precipitate a life of poverty.

On the other hand, as in Mr. Sikhelela’s case, being retrenched can also be a blessing in disguise as it forces retrenchees to reinvent themselves and harness their innate capabilities and life experiences to engage in new income generating activities. 

Tackling the Retrenchment Crisis

As Mr. Sikhelela rightly observed, many formally employed people hardly consider quitting their jobs and starting their own businesses due to the fear of losing their work-based livelihoods and / or failing as business persons. After graduating from university in 1999, Mr Sikhelela joined a large multi-national construction company where he enjoyed a meteoric rise through the leadership ladder as well as many benefits:

“I joined the corporate world in 2000 as a graduate trainee engineer and rose through the ranks to mid-management level by 2005. In addition to a very good salary, I also had housing, car and family allowances, all funded 100% by the company. So given these conditions, I never contemplated or even considered taking the risk of quitting my job and setting-up my own business whose success I could not even guarantee.”

But as fate would have it, this all changed at the end of 2010 when Mr. Sikhelela wasretrenched from his employment when the company embarked on an extensive restructuring programme.” After being retrenched, Mr. Sikhelela’s lifestyle changed drastically:

“…everything changed very fast – with no salary and benefits, I was now entirely dependent on my savings and severance package to fend for my family and service my house bond. I moved out of my company rented house into my own house in a new suburb. I also transferred my children to a new school closer to our new home. All this had an unbearable impact on my entire family because, as you can see, I lost everything –the lifestyle I was accustomed too; my regular income and work-based associates and benefits.”

Indeed, being unemployed for the first time since graduating from university was not only a life-changing experience for Mr. Sikhelela but also a horrendous shock which initially incapacitated him from considering the possibility of engaging in alternative income generating activities instead of solely searching for formal employment:  

“…at first, I exerted all my energies on looking for a new job which would guarantee me the same privileges and lifestyle as I had before being retrenched. The idea of starting my own business never crossed my mind. But by mid-2011, after many failed attempts at getting a new job in my field and running the risk of exhausting all my savings and sinking into poverty, I decided to start my own construction company, Khophoyi Trading Pvt Ltd, with the little savings I still had… I have been permanently and happily self-employed ever-since. My company specializes in the construction of low-cost houses as well as pavements and general renovations.”

Clearly therefore, Mr. Sikhelela started his own business in order to fend off the potential financial ruin and avert the possibility sinking into a life poverty. He however adds that his choice to engage in construction was easy to make because

Are you prepared for the unexpected things to happen in your life?
Retrenchment

“By failing to prepare, you are preparing to fail.” ― Benjamin Franklin

“Unfortunately, there seems to be far more opportunity out there than ability…. We should remember that good fortune often happens when opportunity meets with preparation.”
― Thomas A. Edison

“…the business is basically a continuation of what I have been doing for the past ten years while in the corporate world –so I already had the skills, experience and contacts to seamlessly fit into in the industry on my own. The high demand for low-cost houses and low-entry barriers into the construction industry were added advantages.”

He therefore advises that since starting and running an own business is a steep learning curve in itself, it is critical for retrenchees to engage in an activity which allows them to draw upon the invaluable skills and experience they gained in their previous employment rather than to engage in an unfamiliar trade.  

From the foregoing, it is therefore clear that Mr. Sikhelela’s decision to start his own construction business and become self-employed on a full-time basis was motivated to by complex but intertwined forces, all of which were linked to his previous working experience and the negative experiences of being retrenched. These included:

 

  • Loss of regular income and attendant lack of financial security,
  • Having specialised professional skills, experience and contacts,
  • Quest to create secure self-employment and income generation opportunities,
  • Loss of work-based identity and status,
  • Failure to secure a new formal job and,
  • The loss of professional friends and acquaintances,

Running a small Construction business

According to Mr. Sikhelela, starting and running a small-scale low-cost housing construction business in South Africa is not as difficult as it appears at first and / or from the outside. This is precisely because the start-up capital requirements and operating costs are relatively low. Mr. Sikhelela asserts that before commencing operations, it is necessary to register your company with the Companies and Intellectual Property Commission (CIPC) as well as with one of many construction associations such as the National Home Builders Registration Council (NHBRC) because registered companies are recognized as genuine entities by the public sector, financial institutions and customers. This registration process costs less than R5000. Secondly, one has to procure basic tools and equipment “such as ladders, wheel-barrows, scaffolds, mobile concrete mixers and shovels. I bought all these from the second-hand market in order to cut costs.

As in any other business, the biggest percentage of operating costs comes from theprocurement of inputs, labour and advertisement. However, as Mr. Sikhelela rightly contends, there are several strategies that one can use to reduce these costs when operating on a small-scale basis:

 

“…at my insistence, almost all my customers procure the building materials by themselves and I advertise my services through friends, neighbours and former workmates as well as through the use of cheap flyers. I also exclusively use temporary employees whom I recruit as and when I get a job. ”   

Needless to say, these strategies have helped Mr. Sikhelela to run a viable business without incurring huge operating costs.     

      

Benefits and Challenges of operating a construction business

You can benefit by running your own business. Provided...

According to Mr. Sikhelela, running an own small-scale low-cost housing construction has many benefits for individual entrepreneurs but is also imbued with challenges which, if not professionally handled, may lead to the failure of the enterprise.
Retrenchment Retrenchment Retrenchment

Learn from this practical experience

How your biggest crisis can become your biggest opportunity

    1. Benefits

 

According to Mr. Sikhelela operating a low-cost house construction business has many benefits for entrepreneurs and their communities. Beyond the individual benefits such as increased and secure income streams, personal development, flexible working routine as well as job and financial security, there are also psychological benefits such as increased sense of self and social worth which arises from “assisting poor people, mostly shack-dwellers, to own decent houses.” He also outlines the following as some of the key benefits of running a low-cost house construction business:

Job creation: running a construction business creates employment opportunities for both the entrepreneur and unemployed members of his community. Mr. Sikhelela argues that:

“because I often run two or more construction projects concurrently, I create job opportunities for 30 or more otherwise unemployed youths from my community … so even if the job is only temporary as it is project-based and the wages are relatively low, I am gratified by the fact that I am assisting these youths to fend for themselves and improve their lifestyles through legitimate means and without depending on government hand-outs.”

In short, Mr. Sikhelela’s project has helped to empower disadvantaged and often marginalized youths through employment generation and, by extension, to prevent them from adopting destructive survival behaviours such as crime and drug peddling.    

Professional growth and development: according to Mr. Sikhelela, working in the corporate is based on team work, with each team member performing a specific function to get the entire job done. As such, there is very little opportunity for self-development and growth as redundancy sets in after some time of routine work. On the other hand, as a self-employed entrepreneur, “almost every aspect of my operations is ultimately dependent on me. This forces me to continuously learn, adapt and update my skills in order to be well equipped for the unique challenges posed by different clients and projects.” The autonomy to control “every aspect” of business operations creates invaluable opportunities for professional growth and development for self-employed entrepreneurs like Mr. Sikhelela.

Increased income streams and financial stability: Mr. Sikhelela contends that being self-employed gives him greater freedom and flexibility to work for multiple clients at the same time. This not only enables him to increase his income streams but also to have financial stability and security because,if one client fails to pay me on time, I can always balance this off using income from other projects.” Needless to say, this has helped to stay afloat in a struggling economy.

 2. Challenges 

 

Although operating a construction business has huge benefits and opportunities which, as in Mr. Sikhelela’s case, has helped him to overcome the effects of being retrenched, his experiences as a self-employed entrepreneur have also been imbued with some practical challenges, chief among them being:

  • Lack of credit financing to expand the business,
  • Congested Market (“poor people often engage individual builders to construct or renovate their houses because they are comparatively cheaper.”), 
  • Fluctuating income streams,

Conclusions: Self Employment lessons learned

Retrenchment is a devastating experience which affects retrenchees’ financial security and sense of self-worthy. In order to weather the storm, especially during times of national economic meltdown when formal jobs are scarce, Mr. Sikhelela advises retrenchees to harness their previous working experience and skills and start-up their own business as this would guarantee them long-term job and financial severity as well as personal gratification.

“Nearly all the best things that came to me in life have been unexpected, unplanned by me.” Carl Sandburg

“Sometimes things happen in life that are not part of the plan. When that happens, don’t give up on your dreams, just find another way to reach them.”  Ritu Ghatourey

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