Not All Start Ups are Created Equal – What to consider before making the move
If you cast your mind back to the not so distant past, the idea of joining a start-up was considered a wild and risky move, and one which would get people talking about how brave (or crazy) you were.
These days though, start-ups are far more common and customary. Most people know someone that works at one, or even started their own, but that doesn't mean there is any less risk involved. While the younger generation of workers is gravitating towards the flexible working and ‘tennis tables’ lifestyles offered by start-ups, it still doesn’t mean that it is right for everyone. Even for those entrepreneurial minds that would thrive in this more dynamic and less structured environment, not every start-up is created equal and there is still much to be taken into account.
Growth and maintaining success is hard. Bain research shows that, in fact, only 1 in 9 new companies achieves sustained, profitable growth, and 2 out of 3 stall out, are acquired, or go bankrupt. Rather a harsh truth, but one which should definitely be considered. Knowing the background and researching the company, including the profile of the founder, thoroughly is a must.
That being said, for the successful 10%, joining a company in the early stages can be hugely rewarding. You will be challenged, yes, but you could get to see the ins-and-outs workings of a broad range of the business meaning you can branch out for your specific area of expertise and grow as a professional.
So, what is worth considering if you’re thinking of making the move?
What is your main motivation for joining a start-up?
If it is money – forget it. The practical reality is that your chances of joining the next Facebook are slim, and there are no quick wins. However, if you want to be part of building a company and really making an impact, then you’re more on the right track. The benefits of a start-up aren’t going to be in your bank account, but in the sense of achievement, you feel watching something you built flourish and the pride you feel in gaining your first customers.
How much do you believe in the product?
While the hours might not be that of an investment banker, you will be putting in fairly long days, so you need to want to be there and believe in what you are doing. With so many start-ups in the market, each vying for a piece of the pie, the successful company is going to be the one with the staff who go the extra mile. If you aren’t excited and motivated by your product, then why should anyone else be?
What working environment do you work best in?
The more structure you require, the later stages the company should be at. Early stage firms with only a handful of employees don’t have separate IT, HR, Finance, and Marketing departments; everyone gets involved in tasks outside their official remit and no one is too important for admin. If you want to know what your day will consist of and have a clearly defined job role, being at a firm pre-Series C funding probably won’t be for you.
Speaking of funding –what stage the firm is at will make a big difference.
- Friends, family, and angel investors are the first injection of capital for a business. At this stage, a firm is usually not much more than a well-intentioned idea.
- The next stage is seed funding. This is where business plans are put together, R&D starts to be put into motion, management team assembled, but no commercial operations are yet to begin.
- Series A funding is where things really start to happen, the first bit of revenue might start to trickle in, but the product probably hasn’t yet properly launched.
- Series B and C are where the company will start to feel more established; teams are formed, roles are more clearly defined, but it still might not be smooth sailing. It’s also more than likely that the start-up will still not be turning a profit, despite being around three years old.
Funding stages should therefore always be an important question to ask when assessing how serious the business is.
Joining a start-up may not be for everyone, but for some people, it may be the best decision ever made. Jon Akass, founder of tech bill management company Dividabill, would tell you that start-ups are an emotional rollercoaster. You feel personally connected to your work, so a small set-back feels like the end of the world, but at the end of the day, the long hours and hard work is worth it.
If you want to talk to someone about making the move to a start-up, then get in touch and for further advice and insight!