Should You Accept a Job with a Start-up Company?

October 30, 2017

A job opportunity comes your way, and it looks like one of those once-in-a-lifetime opportunities. But it’s with a start-up company. Should you accept the job?

It’s virtually impossible to generalize when it comes to start-up companies. Some people have taken such jobs, and it’s paid off handsomely. They may have even become millionaires as a result. But others end up in a crash-and-burn situation because the company fails.

What should you do if you are looking at a job with a start-up company? Weigh out the benefits and the drawbacks, and then proceed with caution.

The Benefits of a Job with a Start-up Company

Start-up companies offer certain benefits that can make them very attractive employment situations. Though they don’t always offer better compensation and benefits than more established companies, it’s still a possibility for the right type of employee.

You May Get a Better Compensation Package

If you’re looking for career advancement, a start-up could be the place to find it. They’re usually looking for talented and experienced people, and you can sometimes take the skills that you acquire in one job, and parlay them into much higher income at an upstart company.

Not only is there a possibility to earn a much higher salary, but you might also get stock options. These are very common with start-up companies.

The company provides you with options to purchase a certain number of company stock at a specific price. Should the stock exceed that price, you can purchase and sell the stock in the same day, and make a small fortune. Since the options themselves effectively cost you nothing, it can be a huge windfall – the kind that you will never get at more established companies.

Getting on the “Ground Floor”

One of the big advantages with start-up companies is that you are getting into the organization very early. That means you’ll have a better chance of moving up in position, as well as growing with the company. It may be possible to reach a senior management level position faster with a start-up than with a mature company.

It’s almost like promotion by default. Since you’re one of the first people working for the company, both your position and your income will grow rapidly. You may find that you’re able to reduce the promotion process by several years, compared to your current job.

Possible Work-at-Home Arrangement

One of the biggest advantages with start-up companies is that they tend to be more flexible with their employees. This is especially true if you have specific talents that the company is looking for. To attract the best talent, the company may offer flexible working arrangements instead of higher pay.

If you can establish yourself as a productive at-home worker, a higher salary may also follow in time. As well, as a pioneer in the company, you may have a big hand in shaping future policies for the entire staff. This can be an opportunity for you to develop an even more flexible work schedule for yourself.

The Drawbacks of Working for a Start-up Company

Despite all of the potential benefits of working for a start-up company, it’s probably true that most of these employment situations end unhappily. Here are examples of what can go wrong.

Start-up Companies are Notoriously Unstable

Perhaps the biggest potential obstacle with start-up companies is the very fact that they’re start-ups. Even a company with the best ideas and business plan can still fail. Start-ups face the same problems that virtually every new business do, including competition, unsuccessful product launches, or even legal troubles. If you’re working for such a company, your job could disappear with the company itself.

Still another possibility is that the company succeeds, but ends up being acquired by a larger competitor. That may be good for the company, but it won’t be for you if the new owner decides to eliminate your position. An unfortunate but very common outcome of mergers and acquisitions is the elimination of jobs. That could be more likely with a start-up than with a more established company.

You May be Required to Work Very Long Hours

On the downside, start-up companies are usually very ambitious – they have to be. As newcomers to the industry, they need to become competitive quickly. This will likely require that you put in much more than the standard 40-hour workweek. You may even find yourself working six or seven days a week, and often into the evenings.

Since they’re struggling to survive, startup companies often require a full commitment from all of their employees. That commitment could include giving up a big chunk of your family time and your personal life. It’s one of the biggest considerations when accepting a position with such a company.

Compensation can Fall Apart

Since a start-up is, by definition, a new company, the road forward can be less than certain. Should the company experience cash flow problems, they might cut your once very attractive salary to help improve the survivability of the company.

An even bigger problem can come if a major part of your compensation is in the form of stock options. If the stock never reaches the buy price, or if the company never actually goes public, the stock options will become worthless. If you’re counting on that income to justify taking the job, you may find that you’ve wasted a lot of time and effort on an opportunity that never panned out.

If you’re considering taking a position with a start-up company, thoroughly research the company and the compensation offer. Try to be realistic about the company’s prospects. Take the job only if you have a good reason to believe that it will have an optimistic outcome. Positions with start-up companies don’t always work out that way.

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