Turn a Layoff Into an Entrepreneurship Opportunity

The job market is terrible right now. Anyone who scrolls through LinkedIn will see a deluge of updates stating that layoffs affected their friends or colleagues. 

It may feel more acute for workers in the tech sector. In 2023, 1,191 tech companies worldwide laid off more than 263,000 workers, according to Layoff.fyi. And in the first six months of 2024, 366 companies in the tech industry shed over 107,000 jobs. When you couple mass layoffs with companies hiring at a glacial pace, you end up with scores of frustrated workers who are unsure about their future.

However, when the chances of finding a traditional job are low and the opportunity costs of starting a business decrease, becoming an entrepreneur becomes a more attractive option. This could also be the motivation some workers need to launch a startup. In fact, several successful businesses were created due to a layoff, such as MOODEAUX.

Getting laid off is stressful, but it can lead to an extraordinary next step in your professional life. In this article, we’ll explore how some workers turned a layoff into an opportunity to become small business owners and the pros and cons of entrepreneurship.

Taking Refuge in Entrepreneurship

Becoming an entrepreneur after a layoff is known as the “unemployment push” or the “refugee” effect. This phenomenon became more prevalent in 2024 as more workers found themselves unemployed. According to the Small Business Administration, applications for small business formations (431,246) increased nearly 2% in June 2024 compared to the previous month. 

However, this push to entrepreneurship became the motivation many laid-off workers needed to launch their small businesses. A study by Clarify Capital found that 48% of entrepreneurs credit their layoff as the reason for starting their own business. And 26% of small business owners became entrepreneurs within three months of being laid off.

Clarify also reports that nearly 60% of post-tech-layoff entrepreneurs said that they had already started their own business before being laid off.

Becoming an entrepreneur is inspirational and admirable but requires preparation and dedication. 

Pros and Cons of Starting a Small Business

Launching a startup or small business can be rewarding, but you must weigh the advantages and opportunities of becoming an entrepreneur.

Some of the more appealing pros of starting a business include:

• Being your own boss: Not only do you have the freedom to make decisions about the business, but you can also set your hours.

• Doing work you’re passionate about: It’s not often that you can combine what you love with what you do for a living. Turning that passion into professional success can be fulfilling. 

• Building equity: Creating a successful small business that you grow can become a valuable asset you leave to your family and heirs. 

• Creating jobs: Small businesses generate the majority of new jobs in the economy. USA Today reports that small businesses were responsible for almost two-thirds of newly created jobs in the U.S. between 1995 and 2021.

• Contributing to the local economy: Small businesses contribute 43.5% of the U.S.’s total gross domestic product (GDP), reports the Small Business Administration.

Small businesses also have their fair share of risk. Here are some challenges that you may experience:

• Long hours: You may be able to set your own hours, but depending on your business, you may find yourself working long hours - including evenings and weekends.

• Financial stress: Being an entrepreneur is difficult, especially if you’re funding your small business. You may have to experience some financial heartburn in the early stages of your venture.

• Lack of benefits: Small business owners often don't have access to the same benefits as employees, such as health insurance and retirement plans.

• Limited Resources: Some small businesses have limited access to technology and human resources, making it harder to scale.

You’re Not Alone. You Got This! 

Losing a job is anxiety-inducing and disruptive, but this won’t stop your professional trajectory. You can turn this into an opportunity to set yourself up for an epic comeback through entrepreneurship. 

There are several resources to help you establish and market your small business. What’s more, Origin Story is also here to help you. 

Our team of veteran marketers will work with you to develop and execute a marketing strategy that fits your small business's goals and budget. 

You got this!