Jobseekers need to take a hard look at prospective employers.
What does it take to be a survivor in today's job market? How can you tell if a position is secure? If you're about to hop aboard the next big dot-com, are you confident in the probability of its success? Could you recognize the warning signs of failure? According to experts, some of whom have already braved the murky waters of a start-up venture, it's vital to have a strategic approach to any career opportunity. You must calculate the potential risks and rewards to your financial and emotional status and your long-term employability.
A New Landscape
We see more new business ventures on the rise today than ever before, according to Daniel S. Rippy, author of Sizing Up a Start-Up (Perseus Publishing, 2000). "There is more venture capital today than there has ever been," Rippy says. "For every 10 start-ups, five or six may go out of business, but two will go through an IPO and three or four will get acquired by another partner."
Due to the unprecedented number of potential companies to choose from, many of which will tank, jobseekers must really do their homework when conducting an employment search. Without such due diligence, the positions you take become more of a gamble. "If the situations you put yourself in repeatedly don't pan out, it will become a challenge selling yourself to the next employer," Rippy says. However, if you legitimately make a poor guess about a start-up and want to move on, "you don't have to stay 5 or 10 years to show staying power, but people like to see one or two years of stick-to-it-ness."
The amount of personal risk you can tolerate is very subjective.
Sometimes, the job description that you are "sold" on during an interview differs completely from the bag of goods you receive after starting work. "This usually occurs because hiring is not timed correctly or sales aren't happening in accordance with the company's projections," explains Rippy. If it's a couple of months into your new post and you're still carrying the short end of the stick, you need an appropriate course of action. "Talk with folks around the company," advises the author. "Find out if the technology or product they've promised to deliver is on schedule and if there are longer term implications for your role. If you still believe in the company, perhaps you can move into another position where you'll have a higher degree of impact." But, if what you're experiencing is happening across the board, "you'll need to decide how long you want to stick around."
Increasing numbers of college students and MBA graduates are putting their degree on hold to pursue dreams of fortune and early retirement. But these are the wrong reasons to abandon academia, according to Rippy. "Many young people are starting companies themselves while in school. They perceive their risk as low and that the opportunity alone justifies their decision," he said. Even though working at a start-up is a viable career option no matter what stage you're at, "you must understand exactly what the experience is that you're planning to get and how it relates to your overall career plan. If the company should go under, decide whether or not you'll be able to trade on the experience in the future."
A New Environment
While your aspirations of working for a start-up may be high, it turns out that some folks are more inclined to flourish in this type of environment than others. "The amount of personal risk you can and should tolerate is very subjective," Rippy asserts. It's not uncommon to take a pay cut when joining a start-up, but if it means you'll have to dramatically alter your lifestyle, it may not be the right decision. "I would not accept more than a 15 percent cut in base salary," says Rippy. It's also wise to assume that if you don't ask for things like future promotions, salary increases or other benefits in writing, they won't happen. Your personal relationships may also be affected by the start-up workstyle. "Workaholism at start-ups is widespread," says Rippy. "Many marriages and family units suffer as a result."
Make sure your gumption level is extraordinarily high if you plan to work for a tech-start up. The company may be banking on an innovative technology that is still a long way off from its launch stage. And the working conditions may be sub-standard, because many of these young firms operate out of a garage or other low-maintenance digs until they hit it big. "You really need to be running on passion and believe in the company," Rippy muses, "in the face of a lot of doubt. People have missed out on the opportunity of a lifetime because they didn't believe. But, at times, it can be difficult to decide."
A New Evaluation
So, how do you evaluate the viability of a start-up, especially if you failed Finance 101? For starters, there are a number of industry trade journals, Web sites, and investment analyses that cover market trends and companies competing in the marketplace. You can use these resources to investigate how well a start-up is poised to succeed. Make sure the information you receive is unbiased, that it's generated from reliable sources. Public companies are generally easier to investigate, to learn about specific company trends and the security of employees.
Once you've conducted preliminary research, you should find out who's backing the company. Depending on what stage a start-up is in, it may not have raised venture capital (VC) yet. If it has, learn about the VC firm's track record, industry experience, and how they approach investments. You can learn this by reviewing the portfolio (often posted online) of companies that the VC firm previously invested in. Knowing all about the start-up's competition is important, too. "Do they have deeper pockets than the start-up you're considering?" asks Rippy. "Can you explain to yourself why a customer would buy your product rather than that of the competitor?"
Once you've educated yourself about a start-up prospect and you're ready to interview, check out the company's business plan, even if you must sign a confidentiality agreement. "Your goal is to determine whether you understand it and believe its assumptions," writes Rippy. "I'd be concerned if a company is reticent about sharing its plan."
Finally, be prepared to rate the quality and track record of a firm's management team. Have they achieved past success--or learned from any failures? Try to understand how the firm's board of directors adds value to the firm. Once employed by a start-up, you should trust that your management team will react quickly to mistakes or danger points. But you "should never be content that this is the case," advises Rippy. To recognize a sign of turbulence within the firm, you must be able to distinguish between good and bad chaos, according to the author. For example: "A reorganization is not uncommon at the early stage of a start-up, especially among key management. Those who started the company may need or desire to take a backseat. And, if there is a re-shuffling of employees, it may signal growth or lead to a promotion. But pay attention to staff turnover. Right-sizing can be a great thing, but if there's a drastic lay-off, it can be a tell-tale sign of a firm's downfall," he says.
Erika Welz Prafder is the president of Real World Careers (www.realworldcareers.com), assisting college students and graduates in their hunt for quality employment. She also writes a weekly career column for The New York Post.
