Starting and running a business comes with a host of challenges, one of which includes workplace layoffs – something that seems to be rife in the UK’s job market right now.

With more and more announcements of job cuts hitting the headlines, there’s certainly a growing sense of dread among employees about their future and financial security.

Yet despite the grim outlook, nearly a quarter of businesses reported that personal job loss or unemployment was the main motivator for starting their venture.

So if you’ve faced a job loss and feel less than thrilled about the job-hunting grind, this could be your sign to step into entrepreneurship.

Job losses are inspiring new businesses

According to research from the Startups 100 for 2025 survey, 24% of startups cited job loss as a motivator for starting a business. While identifying a market opportunity was the leading motivation for our respondents (37%), there’s still a strong link between job loss and new entrepreneurship. 

After all, the first half of 2024 saw a record number of 468,000 new businesses created. Given that the rate of redundancies was 3.1 per 1,000 employees (equivalent to around 89,000 cuts) in the first quarter of 2024, there could be a correlation.

The job cuts keep coming

Despite the UK’s unemployment rate being relatively low, there have been 761,358 job cuts made in the last year – the most since 2010 – particularly in the tech, healthcare and automotive sectors. 

A far cry from the Great Resignation era in 2021, more businesses are carrying out workplace redundancies in response to economic pressures and trying to cut costs.

Things aren’t looking too promising for 2025 either. Given the Labour government’s announcement that  National Insurance contributions for employers will increase, there’s the risk of further redundancies being made to reduce outgoings and manage increasing expenses.

Lesley Rennie, principal employment law solicitor at WorkNest, comments: “For some, it’s inevitable that cuts will need to be made to offset the financial impact of these changes.”

Starting a business after a job loss

Losing your job may be a painful experience, but it can also be a catalyst for trying something new and challenging.

You may have been made redundant but you can turn a negative into a positive. Here are a few tips to help you get your business off the ground.

• Refine your idea: every good business starts with an idea, but you also need to justify why you’re launching it, who it’s for and why it’s valuable. If you’re short on ideas, check out our 101+ business ideas guide for some inspiration.
• Do your research: conduct market research to get a better idea of the sector you want to enter and who your competitors are. You should also research your target audience to get a better understanding of their needs.
• Create a solid business plan: a business plan is an important document that outlines your business’s purpose, goals and strategies to achieve them. It should include your mission statement, market and competitor research, products/services, marketing and growth plans and relevant financial projections.
• Leverage your skills (and learn new ones): consider your strongest hard skills (e.g. copywriting, graphic design, data analysis, software engineering, etc.) and soft skills (e.g. leadership, teamwork, adaptability, etc.) and use them to your advantage. However, you should also be open to learning new skills as well, particularly if they’re relevant to your business’s growth or sector. For example, skills in financial management are an absolute must for managing your profit margin effectively.
• Start networking: a strong support network is essential as it’ll help you build professional relationships, particularly contacts that can put you in touch with potential customers or clients. It also helps you stay up-to-date with industry trends and connect with mentors who can offer advice and support in navigating difficulties or setbacks. If you’re not sure where to start, check out our guide on networking for effective strategies for building meaningful connections.

Facing a job loss is never easy, but it could be the push you need to start something even better. Whether you’re building on your skills, chasing a long-time dream or simply taking control of your future, starting a business can be a powerful way to turn a setback into an opportunity. So take it one step at a time, stay curious and remember – every successful entrepreneur started somewhere.

Need some inspiration? Check out our Startups 100 Index for 2025 – packed with stories of founders who made their business dreams a reality.