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Layoff

Also called RIF, Reduction in Force, and Downsizing

Terminating employees, usually for financial reasons rather than performance, to cut costs and extend runway. Also called a reduction in force or downsizing.

Why it matters

Layoffs are among the hardest things a founder does, and handling them with honesty, fairness, and care matters for those who leave and those who stay. They are sometimes necessary to save a company, but the human and cultural cost is real.

For example

Facing a tight market, a startup lays off 15 percent of staff to extend runway, handling it with honesty and generous severance for those who leave.

Related terms

Runway Burn Rate Attrition Rate

Also in Starting Up

See how founders actually handle this on Co-founders, team and legal, part of the Starting Up hub.

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