The Risks and Rewards of Joining a Startup

If asked about the most valuable and prosperous businesses of our current time, what names would come to your mind? Perhaps you’ll think of Apple, Microsoft, Amazon, Google, or Facebook. Such corporations have penetrated into our everyday lives and have a very strong influence on us. We are very dependent on them and we probably cannot picture our lives without them. If we stop for a minute and think of how these organizations initially originated, we will find that each and every one of them was once a startup. They all went through a series of ups and downs and struggled with failure long before achieving success.

These examples make startups seem like a worthy investment. However, are the outcomes of such organizations as startups representative of the majority or minority? A simple Google search indicates that around 75-90% (with respect to the differences between studies) of startups fail. Shocking! Isn’t it? What are the odds that a startup would succeed? Amongst the startups that make it, the likelihood of them flourishing into successful international organizations is even scarcer. When offered to join a startup, there are several factors and components that must be taken into consideration in order to gauge the possible risks and rewards of such a venture. The following are some advices on how to do so:

Weigh the Advantages

Being part of a startup will give you an undeniably unique and thrilling experience. You will learn many new useful skills, such as how the business was established and how it overcame certain challenges. You will enjoy the fun, exciting and lively culture that accompanies the startup and you will contribute to shaping up its culture.

Regardless of the success or failure of the business, your experience will certainly help you in the remainder of your career. Since startups are flat structures, there is very little hierarchy and you will have the chance to easily progress up the ladder in a short time and reach a higher position at some point. Also, joining a startup at an early stage increases your odds of getting equity (ESOP-employee stock ownership plan) and receiving a share of the company.

Disadvantages and Risks

On the other hand, joining startups is associated with many risks and disadvantages. First of all, your job will be at stake and you will generally have less job security compared to established corporations. Also, you will feel more stressed as you will probably have to take on multiple jobs, due to the limited number of employees. Furthermore, you are unlikely to receive all the perks and advantages that would have been available at larger companies due to the scarcity of resources. You will receive less training and guidance, as the company doesn’t have the necessary resources to do so. Finally, you will probably receive a low salary as the company will not have the money to provide higher salaries.

What Factors to Take into Consideration When Deciding?

In addition to weighing the advantages and disadvantages, there are other factors that need to be considered that vary according to each case. You must take into account your stage of life and whether or not you have any commitments such as having a family. If you do, then the decision of joining of a startup becomes more risky and failures will come at a greater cost. Also, you should make your own assessment on the business model and the chances of success of the startup. Ask about the funding of the business and about its founders and investors (are they experienced and reputable?). Ask yourself: do you believe in it? Is the overall offer package appealing enough?

In conclusion, deciding on whether or not to join a startup can be very tricky and requires assessing your situation carefully and weighing the advantages, disadvantages and odds of success wisely. Nonetheless, making the right choice can in some cases lead you to become part of one of the largest and most successful international organization.