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Pros and cons of working in a startup

What do Airbnb, Uber, Canva, The Iconic and Linktree have in common? Aside from instant name recognition and fabulous branding, they all began as startups – tiny seeds of an idea that, with help from a dedicated workforce and investors with deep pockets, rapidly changed the way we travel, get around and shop for clothes.

The startup sector in Australia is thriving. In fact, it’s so strong that we rank among the leading countries for startups worldwide[1]. If you’re a fresh graduate or early career professional, there are many compelling reasons to dive headfirst into the world of new ideas, technological innovation and venture capital, explains Associate Professor Ahmed Ferdous, course director of Deakin’s Bachelor of Business.

‘The startup ecosystem in Australia and globally is an emerging trend that will keep on growing,’ he says. ‘Especially if you have an entrepreneurial mindset, startups offer unique opportunities when you’re starting out in your career.’

Pros of working in a startup

What exactly is a startup? According to Assoc. Prof. Ferdous, addressing a niche, unmet need in the market with emerging technology and a digital platform are tell-tale signs.

Startups are also lean and agile, he explains. ‘Once they’ve entered the market, they look to convert the enterprise into a more established venture or firm.’

It’s this smaller size and all-hands-on-deck approach that can be especially beneficial for early career professionals seeking broad exposure to a range of job functions.

‘At a startup, you’re not working in a silo or a very specific function like you might in a larger company,’ Assoc. Prof. Ferdous says. ‘You’ll get more independence and more responsibility, as you may not have a specific manager or supervisor, and everyone takes responsibility for making sure that the startup is successful. You need to think about how you can best offer value.’

If you harbour ambitions to one day become an entrepreneur and launch your own startup, working in one is a fantastic way to learn about everything from securing funding and hiring staff to new trends in tech.

‘You can develop a more holistic picture of how a business runs by seeing how it works from the inside,’ Assoc. Prof. Ferdous says. ‘Plus, you get more exposure to the sorts of holistic emerging technology businesses could embrace as a startup and how they could harness that to get quick returns.’

Cons of working in a startup

Despite the benefits, there can be a darker side to working in a startup. Greater expectations of output and fewer resources can trigger ‘a high amount of stress’, Assoc. Prof. Ferdous explains. Salaries, too, can be lower than in more established organisations.

A high degree of uncertainty – about funding, technology and the future in general – is a common experience of working at a startup. When you’re a new graduate, it can be tricky to identify and navigate a career path.

‘There’s often natural progression in an established firm to move up the ladder, whereas in a startup you’re quite uncertain,’ Assoc. Prof. Ferdous says. ‘The uncertainty is not only about the startup itself – it’s also about how you want to build a career.’

Not to mention the ever-present risk that the startup will ultimately fail. ‘The founders might have secured very good funding, but within the next six months, for some reason, they may no longer be able to run the business,’ Assoc. Prof. Ferdous says.

Figuring out if a startup is right for you

Are you someone who’s willing to take risks? ‘You probably have the role readiness to work in a startup,’ Assoc. Prof. Ferdous says.

Indeed, a 2017 American study that examined the experiences 10,000 people working in startups found independence and responsibility are key drivers of employment, while lower importance is attributed to job security and salary.

If you’re unsure about working in a startup, Assoc. Prof. Ferdous suggests starting out as a part-timer or freelancer. ‘Look for a more established startup that’s been running for a year or two, rather than a completely new venture, so you have some security and assurance that the organisation is doing well and will carry on.’

While there is some element of risk should the company go bankrupt, it can be helpful to counteract a lower salary by negotiating equity so you’re prepared for the startup to become a public company in the future. ‘It gives you some ownership, and if it’s really successful you might make some serious money,’ Assoc. Prof. Ferdous says.

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Ahmed Ferdous
Ahmed Ferdous

Associate Professor,

Faculty of Business and Law,

Deakin University

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