Working at a start-up company may seem like an appealing job opportunity for recent graduates looking to jump into meaningful work but grads should proceed with caution, experts say. While start-ups can offer valuable work experience and a quicker climb up the corporate ladder, trade-offs can include longer hours, lower pay and fewer resources including workplace benefits.
For 22-year-old health studies graduate John Bastawrous, working at a start-up meant he could hit the ground running. “I’m never bored when I’m at work because everyday is a new experience,” he said.
Bastawrous works at Splash Effect, a Toronto-based digital agency that helps higher education and tech brands expand their online presence through social media management and digital marketing solutions. As a business development officer at Splash, Bastawrous manages client files and helps maintain relationships with current and prospective clients.
“I wanted to be a part of this team because they were offering me something a bigger paycheque can’t buy,” Bastawrous said. “Splash wanted to grow and so did I.”
The entrepreneurial spirit at start-ups can indeed be contagious. And working on a small team makes it more likely that you’ll become an essential part of the company’s success.
For Kishana Singlee however, the unpredictable hours and a lack of accountability during her start-up experience overshadowed her initial excitement. The 21-year-old engineering student spent her summer last year working as a software developer for a Toronto-based water treatment firm.
“You would think at a start-up I’d be given the chance to learn a bunch of different things,” Singlee says. “Ironically, I ended up aggregating data to sell to different vendors who were interested in our water treatment equipment.”
Left doing repetitive tasks, Singlee’s short stint at a start-up made her realize how much she preferred a hierarchical structure and and a boss that assigned her specific projects.
Then there was the issue of pay.
“I don’t think I could’ve survived on my own with the salary I was making, even in five years,” she said, adding that the whole experience left her feeling unmotivated.
Aside from lower pay, there are other drawbacks to consider. A typical work week could go well past the 40-hour mark and weekend meetings with clients are all part of the start-up lifestyle with no extra compensation. Many start-ups don’t offer workplace benefits such as health and dental insurance and/or access to retirement savings vehicles.
For Bastawrous, the desire to grow a company alongside a tight-knit team of coworkers far outweighs the smaller paycheque and other drawbacks. He’s not alone. According to a recent report by the D+H Student Index, an overwhelming majority of Canadian students define success by finding a job that makes them feel happy and fulfilled. Being debt-free and able to cover all expenses is also at the top of their lists. In fact, these definitions of success all ranked higher than “making a lot of money.”
That doesn’t mean start-ups don’t appeal to the almost universal desire for instant gratification; they do. Instead of big salaries however, they tend to offer other perks, like an important-sounding title or even shares in the company.
While hands-on experience can help increase marketability in the long-run, it’s not the only thing to consider, according to Chad Rutherford, managing partner at Summit Search Group, a Canada-wide recruitment agency.
Rutherford warns graduates to be critical of senior leadership at start-ups and reminds grads that reliable pay is important.
“Don’t be fooled when they say you don’t need financial stability because you’re young.”
Whether the start-up has been showered with investor love or the founder has a very rich relative, cash-flow challenges plague the start-up world. The promise of wealth and rapid growth is often met with sudden revenue losses.
If an opportunity sounds too good to be true, it probably is, says Rutherford. Do your homework: Google the senior management, find them on LinkedIn and don’t be afraid to ask them about their past experiences.
Rutherford encourages recent grads to take a more conservative approach to starting their career by ensuring their first five years gives them a base they can fall back on. Once they have a security net in place, they can explore more adventurous career options.
If you do decide to go the start-up route, here are some questions Rutherford recommends you ask a potential employer:
- Did the players involved in the start-up come from a successful business?
- What are the company’s current sales?
- Who are its customers and competitors?
- Are the company’s finances secured or are they still pending?
- What are the growth opportunities?
- Does the brand want to keep growing or are they looking to be sold?