A layoff could completely derail your life trajectory and put you in a financial predicament that you may not have been prepared for. What are you supposed to do when you’re laid off from a startup you put all your time and energy into?

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Layoffs aren’t easy to deal with, especially when it comes to working at a startup. The shock and uncertainty that could come with being laid off can be overwhelming for some. 

In the fourth quarter of 2022, I was laid off from my job for the first time. It wasn’t as bad as getting laid off from a big tech company, as trying to replace a significantly huge income could be quite troublesome. The place I was laid off from was a startup company located in Texas. Because I have no interest in slandering them or any of their employees (I sincerely enjoyed most of the employee workforce there and continue to keep in touch with several of them), I will be a bit vague about their identity, but it was a business in the digital culture and entertainment space.

I was laid off for a few reasons. Chiefly, my supervisor and I very simply were not able to align on how we thought my job was supposed to work. This was a new supervisor, and I hadn’t struggled nearly so much with the one that preceded them. I’d never run into this problem with any supervisors, managers, or upper brass before, which made it a situation that was both frustrating and perplexing. I was recently vindicated when I learned, a few months later, that nobody else seems to be able to “align” with that supervisor, either. Nothing was ever good enough.

The second reason was that I simply didn’t have enough work to do. Every employee was obligated to track all of the time they spent on each activity down to the minute, and since I was hourly, this meant that I needed enough work to hit my regular 40 hours. When that didn’t happen naturally, I reached out to other members of the marketing team to take some of their load. That still wasn’t enough. I was put into a position of needing to artificially inflate how long each task would take, or I’d risk landing at around 20 hours of work each week.

But when I was called out and asked why certain tasks were taking so long, I informed them of the problem. Our solution was that I could spend any residual time working on this one specific, indefinite project that was mostly just idea generation. This felt like a reasonable, if somewhat tedious compromise. Unfortunately, a month later I was given feedback that I spent too much time on that project (the workload they offered me outside of it hadn’t changed). I was axed a month after that.

They have since completely fazed out that role and have not hired a replacement.

My first thoughts were confident: certainly I’d be hired again soon, and not off the job market for long. Unfortunately my release would then be followed by many more layoffs across a bunch of industries, and the market would be bleeding talent for months to come. My confidence evaporated as things continued to get worse. Before long, my thoughts wandered into thoughts of getting roommates again, or moving back in with my parents.

The former made me sick to my stomach. The latter was a nightmare I had to avoid at all costs.

“In our current economic landscape, layoffs are happening across various industries,” says Leonard Kim of AdvisorCheck. “This makes it a lot more difficult to find work and while many experts may have recommended that people have three to six months in emergency funds, due to the nature of the new economic landscape we are in, it might be good to have an additional amount of resources available in order to get yourself back on your feet,” Leonard continued.

If you’ve ever been in this position or a similar one (for many, falling back on parents isn’t even an option — the result is potential homelessness, instead), you’ve likely been terrified of the same results. Not to mention your plans for being able to cover the costs at retirement may be derailed a bit, let alone, the last of your worries. Also, if you’re considering taking out a loan against your retirement account to cover the costs, you will have to pay it back if you get a job. Before making any rash decisions, it’s best to meet with a financial advisor to discuss your options to see if unemployment, your savings and what ancillary income you may have will be enough to get you through this troublesome point in your life.

The Expectations and Instability that Come with Working in Startups

I had no illusions about this being an eventual possibility when I signed on at a startup company. The truth is, they are inherently, notoriously unstable, even in the broader landscape of starting businesses and entrepreneurship. 

According to Forbes, a startup is a new company that relies on innovative products or services to disrupt an industry. This sets them apart from ordinary new businesses in that those don’t necessarily have disruptive or compound growth viability.

Within the United States, 50% of new, non-startup businesses tend to fail within the first 5 years, and 70% after 10 years. At the end of a similar timeline approximately 90% of startups go under. According to Founders Circle Capital (and the LinkedIn reports therein), the turnover rate is also roughly 25% of all new talent lost within a year of their hire date, for any reason, which is double the industry standard. It behooves us to mention that there are many nuances to that statistic, and we encourage you to read the full Founders Circle report. There are graphs and clarifying details that help spell out a lot of good information that isn’t immediately relevant to the purpose of this writing.

That purpose being, what to do if you’re laid off from a startup.

What Am I Supposed to Do?

Okay, the first thing you should do — and this is true of all job terminations — is stay calm. Panic and anxiety are perfectly understandable, but very unhelpful and should be avoided to the best of your ability.

You have several options available to you. They are not all equal or enjoyable, and not all of them are available to everyone, but no matter your circumstances you’re not out in the rain just yet.

This part will start with heavily anecdotal examples, and we’ll build out from there.

Get Job Alerts Sent to You On a Daily Basis

The first thing I did was turn on job alerts on LinkedIn for a few different job titles that I’ve either done before or which apply to me. Some of these included “content writer,” “copywriter,” “marketing strategist,” and “community manager.”

I also reached out to all relevant parties I knew — friends, family, Facebook, LinkedIn — letting them know that I was looking for work and directing them to my website portfolio. Depending on your line of work, you may not need a portfolio, but if you should have one and don’t, that should actually be your first step.

Testing and Constantly Improving Your Resume

Immediately after putting out feelers for work, I quickly started to update my resume with new experience and skills I’d learned. I also updated my portfolio with a few new pieces and asked a few colleagues for testimonials I could feature on my website, which they were all happy to supply. I then posted my updated resume on LinkedIn, though you can also use other powerful job search options, like GlassDoor, Monster, and Indeed.

Taking Job Searching and Prioritizing It Out Based Off of Wants and Needs

I created a list of jobs I wanted to apply to, prioritizing those with remote/hybrid capabilities. I searched for local agencies and major companies that needed some new strength in their marketing departments. After compiling about 50 options, I started sending out applications. About half of those were “Easy Apply” on LinkedIn and could be accomplished relatively quickly, the other half all required custom-tailored cover letters and their own unique application process. As I went through this process, I found more jobs that caught my eye, until I’d ultimately submitted close to 70 applications in total.

With some jobs, you need to go straight to the source and that will require you to do extra legwork to find who is open to work. If you’re a teacher, this can mean calling schools in your area, or if you’re a nurse, doing the same in clinics and hospitals.

Taking Up Freelancing to Supplement the Lost Income

I am fortunate that when I lost my job, my income did not drop to zero, but rather, it collapsed to about 20% of what I’d been making. I was a freelance content writer before my W-2 job came along and held onto one of my clients throughout my time there. After reaching out to others, I had a couple friends pass along fresh client opportunities, wherein I picked up two more clients for a total of three, returning my income to about 30-40% of what it was at before. This would not be sustainable in the long-term, but for an emergency situation, 40% is something we can work with while we buy time performing interviews and searching for new jobs.

Turn In Your Change that You Find Around the Home

It’s a small thing, but when you’re operating on limited funds and waiting for interviews to hopefully roll in, every dollar matters. That’s why I took half an hour out of one afternoon to drive down to my local Walmart and pour my built up stock of pocket change into the coin eating machine. It refunded me something around $70.

Again, not salvation, but it’s something.

Be Very, VERY Budget-conscious

I think it goes without saying, but I couldn’t be laissez-faire with my spending habits. Impulse purchases and vanity expenses would rapidly deteriorate an already bad situation.

Unfortunately, I did have to grapple with the fact that I’d already spent a decent chunk of change on Christmas gifts preceding my termination, and had some medical bills to pay off, so my bank account was already a bit more banged up than usual. That only meant I had to be even more in control of my expenses than usual. Spend no money that did not need to be spent. Novelties could wait (I’ll confess, I did shell out a bit for my girlfriend’s birthday. Nothing insane, but I splurged more than I had in the preceding months).

Pretty much the only area of spending that didn’t change was in my grocery shopping. Fortunately, I eat relatively well, with a strong, diverse diet of healthy foods. Unfortunately, that is not an especially affordable diet. In this, I refused to budge more than necessary, instead vying to eat less, instead of differently. Though, I did start to eat more carbs than I normally would, as they are filling and cheap. It’s a small compromise that I’ll amend once things are more on track. Sometimes these things can’t be helped.

Wherever Possible, Network and Build Out Your Contacts

As an extension of some earlier insights, whenever and however possible, take this newfound freedom of your schedule to establish new connections with others. If you’re in a relatively populated area, there’s a good chance you’ll have your fill of MeetUps to attend, or you can look around through Facebook groups to find a community that matches your interests. Alternatively, you can scour the brick-and-mortar stores/cafes in your area to try and find new groups on the ground floor.

If you can’t find something that quite works for you, try starting your own. It can be a lot to tackle, but speaking entirely for myself, it’s done wonders for me. I’ve learned several new skills, made a lot of friends, and found a wonderful significant other in my time running a group out of MeetUp.

Cash Out Any Stocks and Shadow Equity Your Company Offered

We’re saving this for last because it may or may not be applicable to everyone, depending on the company they worked for. But if your company had any stocks or shadow equity, there’s a chance you can pay those out (or your company would pay them out) upon leaving.

Shadow equity is a form of ownership in a company without actually being an owner. It's used as a way for people to invest in companies while maintaining control over the organization, but not having to worry about the liabilities associated with owning shares. Shadow equity can provide investors with the same rewards as owning stock, such as dividends or capital gains, but without taking on financial risk. 

You tend to have control of when/how you use your stocks, but the shadow equity (or “phantom stock”) is usually paid out by the company once certain terms are met, agreed upon in advance. Check the terms of your offer letter for details on how things worked at your company.

On the contrary, a stock option may not be executable until the company is either bought out or goes through an initial public offering, making the company public and listed on a stock exchange. If you don’t know what to do about your stock options or your shadow equity, a good source to talk to is a financial advisor, as many of them are familiar with these types of situations. You can find a financial advisor in your area using our search tool.

Utilizing Your Extra Free Time for Growth and Much Needed Rest

In the spirit of that last point, now is a good opportunity to upskill — to learn things you’ve always wanted to learn, especially if they can somehow benefit your job search.

Look, learning piano would be great, but it’s not especially useful if you’re on the hunt for a management job in the construction industry, or a high school chemistry teacher. Some people might also get trapped in distractions like video games. But completing an online course for soft skills, leadership talents, time management, marketing strategies, Python programming, project management, etc., not only expands your toolkit of skills, but shows prospective employers that you’re proactive with your time and eager to learn. Some online platforms where you can learn these things include Udemy, Skillshare, Khan Academy, and more. Also, YouTube. YouTube is incredible.

What’s more, you can take this opportunity to — and hear us out, because this will sound contradictory to everything we’ve said so far — rest and recuperate.

Yes, obviously there’s a degree of seriousness and activity that is demanded of you at this time. However, it’s a different type of stress than before. For the time being, take solace knowing that you have a break from unpleasant phone calls, and relentless customer service, and demanding bosses, or whatever else you normally deal with on a day-to-day basis. Wake up and spend the time you’d normally need commuting to go for a walk. Listen to music, catch up on a little recreational reading, spend more time with your pet or children if you have them.

You can and should strive to bring your income back into safe levels, but this is a unique opportunity to decompress and recharge a bit in a way that you can’t when you have a job that drains a lot of your time and mental bandwidth.

If you’re fortunate, and you have the 3-6 months of savings (ideally more) that help offset these sorts of disasters, you can even feel free to take a couple weeks off after your job termination to just…exist. Not all of us can do that, but if you can, more power to you. I know at least two people who lost their job and spent the next month writing a book they’d been toying with in their heads for years. Another, who had far more savings than I’ve ever had in my life, took half a year off for travel and creative pursuits before she even started trying to find more work. Turns out being a team lead for a bunch of UX designers in Big Tech nets you a significant annual income. Who’d have thought.

You’ll Be Okay — Find Support For You

When we lose our jobs and we have to rely on ourselves to design the strategy we need to make it through the moment, it’s usually imperative to get a professional help to get back on track. Financial advisors can take a look through your budget and expenses to help you trim the fat. Together, you can slow down the process of money lost while maximizing money gain while you’re between jobs.

Financial advisors know strategies and tricks to help keep you steady or back on your feet, if you’ll have the courage to turn to them. We created a helpful search tool so you can find a financial advisor that works with you, for you. Make sure to also become a free AdvisorCheck member to get our financial literacy resources to help you get through inflation delivered to you for free as well. 

You’ve got this.

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Written by Cooper Barham

Fact checked by Billy Quirk

Reviewed by KJ Kim

Disclosure

The information provided in this article was written by the research and analysis team at AdvisorCheck.com to help all consumers in their financial journeys, by providing the resources and the insights to help improve one’s financial health, make it through recessionary and inflationary periods of time, and save their earnings to use them towards building a secure financial future. 

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