I've had to let people go directly, and helped others through this process. It sucks, and it's an immensely valuable lesson as an entrepreneur - when you've don

I've had to let people go directly, and helped others through this process. It sucks, and it's an immensely valuable lesson as an entrepreneur - when you've done this once, you will work harder to prevent it ever happening again, while at the same time being prepared to do it faster in situations where that is warranted. A common mistake when winding back a company is only pulling it back to break-even. Eg, 'Our revenue forecasts show we can cover 50 salaries, so let's cut back to 50 people.' There are two problems with this - first, if your forecasts are too optimistic, you will be forced to do another round of cuts and the team / clients will start fearing a death spiral. Second, cutting a business back to break even leaves you with no spare cash flow to invest in future growth - you risk stagnating. Better to add an extra 10% to the layoffs now than risk the remainder of the business. From there, the decision about who to let go is sometimes obvious (you might be dropping a product line, have an underperforming team, or some stand-out low performers). Do what you can to re-deploy your top performers elsewhere within the company - you'll want them, and their advocacy, moving forward. Where it's not obvious, and you can't get guidance from team leaders etc, accept that it's going to be partly a crapshoot where nobody wins. How you communicate the decision and the reason why is critical. steven2012 has covered this well elsewhere in the thread. Be honest, take responsibility, and be positive for the future you plan to create. Good luck.