Start-up Companies: The Risk-Return Trade-off on Your Career

Every step you take in deciding where, when and how to make a career move can have implications for building your career.  That is, when you accept one job change within a company or one new job with another company, you are rejecting all of the other choices by default.  Some people make these choices with an amazing lack of thought about the effect of their decisions on their future career.  For example, when you decide to accept a job with a small start-up business rather than a large, well established organization, you are opting for a high-risk, but possibly a high-return career move.  Making such a decision is perfectly acceptable - just as long as you understand and are willing to accept the risks.

     Whether they spell it out or not, start-up companies are asking you to share some of the risk with them.  They are asking you to invest a very valuable commodity - your time.  Although it may seem that a few years of your time is not a huge investment, it's huge in relation to the time you have available to build your career.  Given the fact that most career paths are fairly well established within a 10 to 20 year window, a two year investment represents 10 to 20 percent of your career building time.  That is not a small investment.

     If you decide to risk a large percentage of your career in a high-risk situation, you would be wise to do as much research before you make a choice as you would if you were investing a large amount of money, since the investment of your time is no less important.  You need to learn about the background and experience of the principals of the company. You need to evaluate their plans for growth.  Have they conducted a market survey for their product? Do they have a source of investment capital? Have they sought out professional advice related to legal, accounting, advertising and other business-related matters in areas where they are not experienced themselves?  That is, do they know where their company is headed or is the whole idea half-baked? 

     Quite a few people wish they had asked those questions before jumping on the Internet-boom bandwagon a few years ago.  They signed on with new Internet companies who had little more than a good domain name and a few computer programs.  What they lacked, which turned out to be their downfall, was any clue about how to run a successful business.  Many of them "paid" their new employees with future stock options and pitiful salaries.  The stock options melted away when the companies went out of business and the small salaries left the employees discouraged and in debt.

     Of course, there are some stories that had very happy endings.  The employees who took a risk with Google are no doubt thrilled with their decision.  One difference was that the managers of Google had a plan - and what a plan!  The Google team also knew enough about business to hire competent professionals to help then build a strong company.  Yes, their employees were still taking a risk in the beginning, but the risk was lessened because of the good business decisions make by the owners.

     If you decide to invest a few years of your business career-life with a small start-up company, do so knowing as much as you can about your employer.  Do so knowing that you run the risk of having to start over from nothing.  And make sure that you are going to be compensated for the risk you are taking.  If you don't, you may walk away with nothing more than some information about how not to run a business - of course, that's not entirely useless information.

[Footnote: Before you select a start-up business as your new employer, I recommend spending some time on the Small Business Administration website at www.sba.gov to help you gain some understanding of the potential pitfalls of starting a business.  This will also give you information about what your new employers should be doing, if they plan to beat the odds.]