Entrepreneurship After Job Loss: What to Understand and Avoid

I grew up in the times of re-engineering where companies learned that a great way to increase profits was regular layoffs. A family friend lost his job during this time. His wife did not have a job and their daughter was getting married. Rather than worry his family over the job loss, the man got up every morning at the regular time, got dressed in a suit, drove into town and pretended to be at work. He did this every day until he found a new job. 

Today, much of the stigma of job loss is behind us since it's become such a regular thing. Every time there is a mass layoff, people take to Twitter, TikTok and LinkedIn almost instantly, sharing what is happening in real-time. Just because we are more open about the process, however, does not mean that it's not as damaging as in the days when that family friend pretended to be employed, so as not to upset his family. If you've decided to take on entrepreneurship after a job loss, it's essential to recognize the impact of that event so it does not spill over into your business. Here are some of the common effects of job loss that you may see show up in your business. 

Financial Fears

Losing a job means losing income, which can create a feeling of scarcity. If you are heading into an entrepreneurial with financial trauma, it can carry over into your business. If you are using a severance package to start a business, you may be putting a lot of pressure on yourself to find instant success. It's important to begin to identify how your feelings about money are impacting your entrepreneurial journey. A question I like to ask myself is "Is this feeling coming from a place of trauma?" I get jumpy when I talk to my banker due to the financial trauma I experienced as a newly single mom. There is no logical reason for me to feel this way but when I make decisions around spending, I need to make sure it's coming from my current reality rather than old fears. If you've been let go, expect to have some complicated feelings around money. If you are aware of the issue, it's much easier to navigate. 

Heath and Mental Wellness Impact

Job loss can have an impact on your mental health. Folks who have suffered job loss are less likely to have healthy marriages and a good family life. Experiencing a layoff increases rates of suicide, especially among younger workers. Losing a job increased the odds of poor health by 54%, and among respondents with good health before the layoff, it increased the odds of developing an illness by 83%. Safe Work Australia found that workers in less psychologically safe work environments - such as ones with the threat of layoffs - take 43% more sick days and are more subject to workplace injury. Insight Globals' November 2022 survey showed that 70% of US workers fear layoffs and that fear does not immediately go away because you are now on your entrepreneurial journey. Entrepreneurship can be stressful under the best of circumstances. If you are pursuing it after a job loss, it's important to surround yourself with support and solid wellness practices. 

 Bitterness

The current way of conducting layoffs is very toxic with people hearing about it in the news or suddenly losing access to email. It's important that if you were laid off in such a way it's important to make sure the experience has not left you with a negative impression of the world. You can vow to build the type of company that would never treat people so poorly and yet that feeling be the catalyst for your success. If you are dealing with a client who reminds you of your old employer, it can be helpful to remind yourself that you are in the driver's seat now. Losing a job takes away our sense of control and safety. Now that you are running your own business, you have more control over your success if you don't allow bitterness over past mistreatment to negatively impact your relationships.

Entrepreneurship can be a positive and empowering experience after a layoff nad help you regain your sense of control. The key is to have an eyes wide open approach and identify triggers early in the game. Many entrepreneurs leverage their job loss to create successful businesses and you can too.