Joining a Startup: What You Should Know
NEW YORK (MainStreet) — With the U.S. unemployment rate currently a shade over 9% and the “underemployment” rate closer to 20%, jobless Americans can’t be too picky about the jobs they take. But before you jump on a position with a fledgling company, make sure you know what you’re getting into.
Right off the bat, know that fledgling companies may be your best bet for a new job. Historically, smaller companies are the biggest drivers of employee hiring, and that trend has proven largely true in the post-recession years.
According to a March study from the Kauffman Foundation, a research firm, the 2010 startup rate was the highest since 1995. Overall, 565,000 new businesses were launched in the U.S. last year, though the Kauffman study does note a rise in sole proprietorships, which typically don’t hire many employees.
But sole proprietorships aren’t the only small business game in town, and finding out what owners of startups are looking for in a new hire can help job seekers with any skill set.
Here are some takeaways from the Kauffman study:
Aim your pitch to younger bosses. According to the Kauffman study, startup growth was highest among 35- to 44-year-olds, rising from 2008 to 2009. That’s not to say that older Americans aren’t starting new companies; Kauffman reports that the oldest age group in the study (55-64) also saw an increase in new business launches. But companies run by younger owners tend to last longer and represent a better long-term bet for job seekers.
Geography matters. Where you live may get you closer to working for a startup, especially in Nevada and Georgia, which Kauffman calls the fastest-growing states for new startups, with California, Louisiana and Colorado trailing behind. The worst states for startup job opportunities are West Virginia, Pennsylvania (surprising, given major urban areas like Philadelphia and Pittsburgh, where there are great colleges), South Dakota and Indiana.
“Regional patterns have a significant effect on entrepreneurial activity rates,” notes Robert W. Fairlie, the Kauffman study author and an economics professor at the University of California, Santa Cruz. “From 2009 to 2010, entrepreneurial activity rates increased in the West, further widening the gap between the West and other regions. Rates in the South remained steady, but declined in the Northeast and Midwest.”
Ask yourself where you are, emotionally. Polly Black, director for the Center of Innovation at Wake Forest University, says that job seekers need to share the business owner’s passion for what the company is doing.
“It is very exciting to join a startup,” she says. “Since it is often an ‘all hands on deck’ situation, you will have the opportunity to be involved in all aspects of the business right away.” But you’d better be enthused about it, she adds, because you’ll likely be working long hours for low pay.
Know the financial outlook. It’s OK to ask a startup owner or manager what the state of the company’s finances are, both long- and short-term. Black says to focus those questions on what kind of financial backing the company has in its back pocket, as well as its profit status. She also advises asking if the company managers can “clearly articulate the market need they are meeting with their product or service in a sentence or two.” If they can’t, she says, that “may indicate a lack of focus and clarity that could result in the company going nowhere.”
Clearly define your role. Black also advises job candidates eyeing a fledgling business to find out what their roles are expected to be. Establish your specific job description and determine whether you will have any role in decision-making. Also talk to your prospective bosses about how much freedom you will have to create and innovate. If you can get positive – or at least satisfactory – responses to those questions, you could be looking at a green light.
With jobs scarce these days, the good news is that new companies are hiring. But before you agree to come on board, know what your opportunities and expectations are.