Sort the safety net first: file for unemployment, ask whether your state will pay it while you start a business, and line up health coverage inside 60 days. Then start with what you already know and the people who already know you, and get the idea in front of real buyers within weeks. Registering a business takes a day. Finding someone to pay you is the actual job.
The polite advice is to “take some time to reflect.” So you reflect for three days. By day four it’s 1am and you’re on Canva designing a logo for a business with no customers, no name and, technically, no idea.
Why it’s harder than it sounds
A layoff hands you two things at once: time and a ticking clock. The time feels like freedom. The clock is the severance, the savings and the health insurance, all quietly counting down while you pick fonts.
Then there’s the urge to prove something. Fast. To them, to you, to the LinkedIn post you haven’t written yet. That urge is useful for about a week. After that it starts making decisions, and it makes terrible ones (the logo, the website, the 500 business cards for a company that pivots in March).
The good news is that the boring admin can buy you months. Most people just never ask for it.
What actually works
File for unemployment, then ask the magic question
File as soon as you can, and when you do, ask whether your state runs a Self-Employment Assistance program. According to the US Department of Labor, these programs pay you an allowance, the same weekly amount as your regular unemployment benefit, while you work full-time on starting a business instead of job hunting. The catch: only a handful of states run one (the Labor Department lists Delaware, Mississippi, New Hampshire, New York and Oregon), and you generally have to qualify for regular unemployment first and meet your state’s criteria. Two minutes on the phone. Potentially months of runway.
Fix health coverage before it fixes you
Losing job-based coverage, including COBRA, can qualify you for a Special Enrollment Period on the Marketplace. HealthCare.gov says that applies if you lost coverage in the past 60 days or expect to lose it in the next 60. Put the deadline in your calendar today. Nobody builds a business well while worrying about a dentist bill.
Build from the job you just lost
Your old job didn’t just pay you. It taught you an industry, its suppliers, its buyers and its annoying gaps. One founder who’d spent ten years running product development at an arts and crafts company was let go on the same day as her good friend and colleague. They’d already been taking notes for their own company on the carpool to and from work. Her words: “when we got the boot, we’re like, well, we’re ready. Let’s just do it.” They met for breakfast, and the very next day they registered their LLC.
Show it to a buyer before you build it
Those two didn’t start with a warehouse. They showed about 30 little items to a well-respected salesperson they knew who was looking for something new. He signed on. Four weeks later they had a booth at a specialty toy retailers’ trade show (the last one left, in the newcomers’ aisle). Your version might be three former clients and a one-page offer. Same idea. Get a yes, or a useful no, before you spend money.
Do the math before you print anything
The same founder priced everything, printed about a thousand price lists, then worked out that offering free shipping meant “we’re going to be losing 20% on every product.” She threw them out and reprinted. Cheap lesson, as these things go. Run your numbers, with shipping, fees and your own pay in them, before anything goes to a printer.
Hear it from someone who’s done it
Sabre Mrkva is the CEO of Bright Stripes, which makes DIY craft kits for kids. She was let go in 2018, six months pregnant, and registered her company the next day. She also collected “a little unemployment” while getting her feet under her. Jump to 1:40, or listen on the episode page.
FAQ
Can I collect unemployment while starting a business?
In some states, yes, through a Self-Employment Assistance program. Elsewhere, the rules on self-employment income vary, so ask your state unemployment agency directly when you file, before you take your first payment from a client.
Should I use my severance to start a business?
Use it as runway, not as a startup budget. Every dollar spent on a logo is a week less to find your first customers. Spend on things that get you in front of buyers.
How do I bounce back from being fired?
Give yourself a short, honest window to be furious, then give yourself a job: one conversation with a potential buyer every day. Momentum does more for your head than any amount of reflecting.
Is it smart to start a business after a layoff at 50?
It can be one of the best times. You’ve got the contacts, the industry knowledge and a clear picture of what customers in your field actually need. The founder above built hers from a decade of knowing her industry inside out.
The full conversation also covers launching just before Covid and why fast growth can drain your cash. Listen to the full episode.