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Join us as we explore the journey of 150 laid-off individuals who became business owners, shedding light on their motivations, challenges, and triumphs. Through this study, we hope readers will gain insights into the transformative power of adversity and its pivotal role in driving the entrepreneurial spirit.
Key Takeaways:
Nearly half (48%) of post-layoff entrepreneurs credit their layoff as the reason for starting their own business.
Over 1 in 4 post-layoff entrepreneurs started a business within 3 months of being let go.
Family members (37%), friends (25%), and unemployment benefits (15%) were the top methods of raising capital for these business owners.
Nearly 1 in 5 post-layoff entrepreneurs leveraged connections from their former company to start their own business.
Over 1 in 4 post-layoff entrepreneurs turned down other job offers when starting their company.
45% of post-layoff entrepreneurs pay themselves a salary; over half compensate themselves more than their previous employer.
Cash flow (53%), time (49%), and marketing (43%) are the biggest challenges for these business owners.
Turning Setbacks Into Startups
A layoff isn’t just a tale of loss — it’s often the catalyst for innovation and new beginnings. Let’s look at how long laid-off employees took to start their own businesses and to gain customers.
Key Findings:
48% of post-layoff entrepreneurs claim their layoff encouraged them to start their own business; 45% had already started their own business before their layoff but said getting let go encouraged them to devote more time to it.
- Nearly 3 in 5 post-tech-layoff entrepreneurs claim they already started their own business before their layoff.
Over 1 in 4 post-layoff entrepreneurs started their business within 3 months of being laid off, while 30% launched between 3 to 6 months after being laid off.
43% of post-layoff entrepreneurs acquired customers less than a month after starting their business.
The top 5 ways post-layoff entrepreneurs raised capital for their companies are:
- Family members (37%)
- Friends (25%)
- Unemployed benefits (15%)
- Savings (6%)
- Venture capital firm (6%)
Nearly 1 in 5 post-layoff entrepreneurs leveraged connections from their former company to start their own business.
Choosing Entrepreneurship Over Employment
Embracing entrepreneurship in the aftermath of job loss represents a bold leap toward self-reliance and professional reinvention. This shift is marked not only by the pursuit of new business ventures but also by a significant transformation in the founders’ professional lives and personal well-being.
Key Findings:
Over a quarter of post-layoff entrepreneurs turned down other job offers when starting their company.
45% of post-layoff entrepreneurs pay themselves a salary; over half (52%) compensate themselves more than their previous employer.
The biggest challenges for post-layoff entrepreneurs are cash flow (53%), time (49%), and marketing (43%).
Post-layoff entrepreneurs report improved work-life balance and mental health since starting their own business, but they were just as likely to feel improved job security as worsened.
Methodology
For this study, we surveyed 150 business owners who were laid off from their previous employer within the last four years about their entrepreneurial journey and challenges.
About Clarify Capital
Clarify Capital specializes in providing tailored financial solutions to businesses, helping them achieve their growth objectives with ease and efficiency. Discover more about their services at ClarifyCapital.com.
Fair Use Statement
Feel free to share insights from our article on transitioning from layoffs to entrepreneurship for non-commercial use. Just remember to link back to our page for the full context and more information.
Emma Parker
Senior Funding Manager
Emma holds a B.S. in finance from NYU and has been working in the business financing industry for over a decade. She is passionate about helping small business owners grow by finding the right funding option that makes sense for them. More about the Clarify team →
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