Just ruminating here, but I didn’t fully understand the hesitance to do paycuts. Of course, I understand that in some cases the financial problem is severe enough that layoffs are the only option. But it’s conceivable that in many cases a simple, say, 20% cut to salaries across the board could be enough to tip the balance.

Some employees will immediately start looking for another job, but that seems totally fine and reasonable to me, both for the employee and the employer. They get to retain most of their income and all their benefits while doing so, and if they do leave successfully that just saves you more money too.

With all of that said, it does occur to me that with small startups there just may not be enough employees for paycuts to help much. The above is really written with 100+ person companies in mind I suppose.