For some people, working for a startup sounds like a dream. Maybe you’re not looking for a typical nine-to-five, or you want to work somewhere you can flex your creativity.
There’s certainly no shortage of cool startups to work for. According to US Census Bureau data, 5m+ new businesses were created in 2022 alone; globally, there are 305m+ startups created each year.
But not every startup is a success story, and these high-pressure work environments aren’t right for everyone. If you’re wondering if working for a startup is a good idea, you should weigh the pros and cons before accepting that intriguing job offer.
How Do Startups Work?
A startup is a company that is in the very early stages of development. It may have one founder or a team of co-founders, and maybe even a few employees (a startup has an average of four employees in its beginning stages). The focus of a startup is to solve a problem for its target audience.
Startups rely on either bootstrapped funding or funding from investors. Because of this, money is usually tight. You may be working out of a coworking space or from a founder’s garage until the company has enough money for its own offices.
With few employees, each team member may be responsible for more work and may need to take on a wide variety of tasks. You might also make less money than you would at a long-standing company, but you may have other perks, like a flexible schedule or equity in the startup, should it be successful.
Pros of Working for a Startup
Working for a startup is a unique experience that can be extremely rewarding. If you’re passionate about the mission, love being involved in all aspects of a business, or simply want an alternative to a strict nine-to-five schedule, a startup could be a good fit for you.
1. Ability to innovate
Startups are all about solving problems — that means tapping into the ideas and experiences of all employees to try things out. You can pitch your ideas or brainstorm right along with the founders of the company, an unlikely opportunity at a large corporation.
Startups typically offer more freedom to test new ideas catered to their target audience, compared to working at more established companies with stringent policies and procedures in place for new product or service development.
2. Opportunities to learn new skills
When it comes to startups, it’s all hands on deck, all of the time. Even if you’re hired as a customer service representative, you might find yourself helping out with crafting social media posts or providing input for a marketing strategy.
While a small team size can have drawbacks, it also provides each employee opportunities to explore different jobs and expand their horizons.
“Startups are a great environment for anyone to build their skillsets,” Joe Karasin, chief marketing officer and founder at Karasin PPC, told The Hustle. “Because a startup requires all team members to wear many different hats, a startup employee will, by nature, end up working cross-functionally.”
Even if you decide not to stay on board with a startup, you will leave with a skill-building experience that can lead you to other opportunities.
3. Flexible hours
If clocking in at 9 am and counting down the minutes until lunch or 5 pm sounds dull to you, you may find that a startup provides scheduling better suited to your needs.
Sure, your days will be long, but you may be able to start earlier or later in the day. You might be able to take a longer lunch break or more frequent breaks throughout the day to balance out the extra hours you’re working to get a business up and running.
4. Unique perks
What they lack in high salary offers, startups make up for in interesting benefits. You might be able to work from home if there isn’t enough funding for an office, or you might earn equity in the company over a bigger salary.
If you’re working in a small office or at a founder’s home, maybe you can bring your dog to work with you or have access to free drinks and snacks. Some startups may offer free or discounted gym memberships, or discounts on company products and services.
5. Supportive, collaborative work environment
When working for a startup, you may end up spending a lot of time with your co-workers as you all try to solve problems and meet clients’ needs in the most resource-efficient ways possible. As such, you’ll need to learn how to effectively collaborate and communicate with each other. Cliche as it may sound, co-workers at a startup can begin to feel like family.
Cons of Working for a Startup
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With a new business comes new challenges that you may not be used to if you’ve only worked for larger organizations. Startups, working with limited funding, are also constrained by time, striving to develop and sell their innovative product or idea ahead of competitors.
1. Uncertainty for the future
About 90% of startups fail, with 10% of startups failing within the first year of business. That makes it incredibly risky for employees, especially for those who choose equity in the company over a bigger salary.
Today, there are 1.3k+ unicorn startups. Should your company reach this level of success, you’ll be thankful you took the risk. But if your startup fails, you may be left with very little in exchange for your time and work.
In general, startups offer less job security — and if you lose a startup job, you may not see severance checks or get a PTO payout like you would at a traditional company.
“If you take a role at an established company, you can feel fairly secure that your company will be there when you wake up in the morning and you will still have a job to go to. In startups, it can end overnight or even go through a slow, painful death,” Karasin says.
“Essentially, working in a startup is a lot like gambling. You can achieve some great success, but for every success story, there are hundreds or thousands that failed.”
2. Poor work-life balance
Startups have smaller teams of employees who handle all aspects of the business, so employees may work longer and/or odd hours to get everything done on their to-do lists. You may need to work from early in the day until late at night, and expect to answer work emails on the weekends.
You’ll need to have passion for the business mission to make the lack of work-life balance worth it in those early years.
3. Lower compensation
If you’re joining a startup, your salary will typically be lower than if you had a similar position at a well-established company.
However, there is potential for equity. Startups generally reserve 10%-15% of company equity for their employee stock option pool (ESOP), which provides percentages of equity for employees.
4. Limited money and resources
Limited funding will impact your salary, but it can also create other challenges. You may not have the best tech or equipment, so you’ll have to be innovative and make do with what resources are available.
While some bigger companies are able to offer professional workshops or training, startups may not have the time or money to provide these types of perks. Instead, you’ll learn on the job as you go.
Is Working for a Startup a Good Idea?
It often takes real grit and determination to work for a startup.
If you don’t do well with uncertainty, working for a startup might not be the best fit. The work is challenging and time-consuming, and the company could easily fail for reasons outside of your control.
Although working for a startup comes with less security and structure than a bigger corporation, the high risk can come with high rewards. If you’re driven, dedicated, and passionate, working for a startup can provide many benefits that you may not find elsewhere, like opportunities to learn new skills and help shape the company.
Even if the startup fails or you decide to move to a more traditional company, you’ll likely find that your startup experience will serve you well in any new role you tackle.
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