Laid off employees might be the perfect storm for budding entrepreneurs.
We are not yet in a recession. All of the layoffs that are occurring are mostly companies right sizing from the tremendous employee growth spurt driven mostly by the pandemic. The sheer numbers of employees added during the pandemic by some tech companies is almost staggering. As a percentage change in the total number of employees from 2019 to 2022, Amazon doubled its workforce at 106%, Meta also doubled at 103%, Google at 64% and Microsoft at 53%. Apple was somehow very controlled and efficient with only a 20% increase, therefore no major right sizing or layoffs from Apple. So, tens of thousands of people have been let go in the past six months. What does all of this mean?
That it is a perfect time to start a company. Layoffs almost always provide the potential startup ecosystem with an abundance of talent, some with several years of experience. Past downturns have proven fruitful for budding entrepreneurs. After the dot-com bust, Facebook and YouTube came along. Airbnb, Slack, and Uber all launched from the ashes of the 2008 economic crisis.
Why does it take a layoff to create more entrepreneurs? Quite a few people have aspirations of becoming an entrepreneur earlier in life but then the lure of a cool brand, six figure salaries, cafeterias and other perks beckon. So, how to respond to your perfect company laying you off? Find fellow talented people, examine a large marketplace and create a company to solve a niche problem. Seems like some entrepreneurs are already doing exactly that.
A new survey of over 4,000 laid-off tech workers has revealed that a remarkably large proportion start their own businesses shortly after being let go. Out of the 4,188 respondents to Clarify Capital’s 2022 survey, 1,007 had started their own company. The new company founders reported making around $13,000 more per year on average than they were making at their previous jobs. Millennials saw the biggest change to their wages after starting their own companies, with an average pay bump of over $17,000, while Gen Z entrepreneurs saw a $6,638 increase on average.
Clarify Capital’s survey also looked at why so many tech workers decided to start their own businesses after being laid off. The main factors referenced included ‘professional growth and development’ (58%), ‘money’ (52%), and a desire to ‘create something new’ (49%). 23% admitted their main motivation was difficulty getting hired by other companies after they were laid off. Interestingly, the survey showed that the majority of businesses started by recently-laid off employees were launched within a year of their departure from their previous employment.
So, here are some steps you can take now to move towards becoming an entrepreneur.
Refine your brand. Now might be the perfect time to take a fresh look at your brand. Review all your social media, especially LinkedIn, add relevant keywords related to your skills and experiences.
Spark your network. You would be amazed at how robust your network might be. Former employees, industry peers, university alumni, reach out to all with gentle but focused inquiries.
Research the startup ecosystem. Most people who work at large companies might not be paying attention to the robust startup ecosystem in their local market. Identify the key players in your local startup ecosystem from universities to events, to networking to investors.
Attend relevant startup events. Where you never had the time or interest to attend the startup events, now is the time. Attend meetups, pitch competitions and networking events.
Reach out to entrepreneurs you admire. Identify local startups that you personally admire or are interested in…not to join but to learn more. Try and connect with one of the founders and have a coffee or tea. Learn what they did well and not so well. What’s key is that entrepreneurs have deep networks filled with other entrepreneurs.
Resolve your fear. You were not born to work at Google or Microsoft. You have the capabilities to create a startup. Perhaps being laid off will give you the fight and grit to attain what you could have always had. The life of being an entrepreneur.
