Questions to Ask When Working for a Startup

Working for a Small Business
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There are several important questions to ask when working for a startup. Many people accept jobs at startup companies dreaming that doing so will propel their careers into the stratosphere, with visions of eBay and Google dancing in their heads. However, it's a fact that startup companies have a high rate of failure, which can translate into job uncertainty. Ask the right questions so you won't be surprised later.

Questions to Ask When Working for a Startup

Before you accept an employment offer from a startup company, or soon after you begin working there, ask the following questions during the job interview or orientation.

  • How long has the company been in business? A startup company may be in the initial stages of organizing or it may be only a year or two old. Obviously, a company that has at least a few quarters of business under its belt provides a more accurate picture of the job opportunity than a company that's still looking for office space. The longer a company has in business, the easier it is to assess the merits of a job offer.
  • How much funding is behind the company? Startups should have at least three years of capital to pay salaries, rent and operating costs.
  • What benefits do you offer? Listen carefully for the answer. Note which benefits are tangible, such as health care benefits, insurance benefits and the like and which are merely selling points. "You can come to work in jeans and a t shirt" is a sales pitch, not an employment benefit. Many startups do not offer meagre tangible benefits and seek instead to sell employees on the intangibles, such as a casual work environment or flexible hours. That's not bad per se, but employees need to know exactly what benefits are offered so they can assess if the job is a good fit for their lfiestyle.
  • Are stock options available, and if so, what is the vesting period? Many startup companies pay their employees a portion of their salary in stock options. Options are not free stock. Options promise to sell you the stock at a set price, typically the market price on the day you were hired although the company's owners can set any price they like. You can exercise your option to buy the stock, thus giving you some ownership in the form of stock in the company. Some companies have a vesting period or a period of time they require you to work for the company before you can actually exercise your stock options. It's important to know how long this is. If you're counting on buying stock in the company and turning it around at a profit, but you can't buy it for five years, will you really stay that long in the company?
  • Do you own any patents or trademarks? Asking about intellectual property helps you understand the potential for market dominance, an important signal that a startup has growth potential. Patents and trademarks make it easier for a new company to take the lead in a particular area.
  • Are there any lawsuits against the company? Again, lots of lawsuits signals a company in trouble and a startup you may want to avoid.
  • Who is in charge? That may sound like a simple question, but some startups are run so loosely that it makes getting work done very hard. If you don't know who to go to for approval on budgets or projects, you won't be able to function efficiently.
  • What is the three year plan? The five year plan? "We don't plan ahead that far" is a danger sign. If they can tell you where they want to be in three, five and ten years, chances are good they'll get there.

Other Considerations

Working at a startup company is very different from working at an established company. Rules tend to be looser. Innovation and quick thinking tends to be rewarded. If you like going to work and doing the same old thing day in and day out, punching a time clock and collecting a paycheck, a startup environment is probably not for you.

Most startup companies depend upon a flat or flattened version of the traditional hierarchical organizational structure. It's unusual for a startup to have a formal chain of command. It's more like a big team effort, with everyone working together and multiple job titles. You have to be willing to step outside of your comfort zone and do things that might not be in your job description to help the company success. Long work days are the rule, rather than the exception.

Startups entail great risk, but there is also potential for great rewards as well. While working for a startup is riskier than taking a job with a gigantic company with hundreds of employees, many people find that the energy, creativity and vibrancy in a startup environment is just what they need to keep their careers fresh. Be sure to remember the questions to ask when working for a startup so you know how to avoid potential pitfalls.

Questions to Ask When Working for a Startup