In this struggling economy where one may be forced to accept a position with any size business, understanding the differences inherent in working at a start-up, small, or large company sets expectations and diminishes frustration. Size does matter.
Working for a start-up company is sexy and exciting, filled with endless possibilities. The path is new and uncluttered with corporate politics and muddied company history. For the newcomer, it’s a blank page waiting to be filled. Because it is unchartered territory, it’s also pretty scary. There are many questions to consider prior to signing on with a newly formed or young company. Before taking the great leap, it would be wise to consider a few of the following topics.
Risk tolerance is generally associated with finances and investment opportunities, or the risk a person is willing to take with their money. However, it can be applied to one’s life in a broader sense and should be prior to hiring into a start-up firm. An easy way to determine one’s risk tolerance is to answer a basic mortgage question. Which is more preferable – a 30-year fixed or a 7-year balloon? Does the thought of the unknown at the end of a 5, 7, or 10-year balloon cause heart palpitations and shortness of breath? The response is a good indication of one’s ability to withstand risk.
It is, therefore, imperative to ask the question, “What is my ability to withstand uncertainty?”
It’s a difficult subject to raise but it is to essential know if there is enough capital on hand to pay employees and to keep the company solvent. Knowing how the company intends to pay its employees is important information. If there is cash in the bank, it should last long enough to cover costs until income begins. Is there a line of credit that is available to pay the company’s bills? The response might be there are investors looking into the company. Investors are wonderful, but they need to be on board with checks written prior to joining a new business.
There are a couple of issues surrounding people that need to be addressed. A start-up company is the idea of one or more founders. Think of it as their baby. The founders’ personalities, strengths, weaknesses, and their own tolerance for risk determine how they will get along when the going gets rough, as it will for any company. With few people on board, it’s critical to know if their personalities mesh with one’s own. There’s not a place of refuge in a small organization and no other department to transfer to if there is conflict.
Because the employees are few, it is necessary to determine if a person will get along with the team. New companies require a lot of work and long hours. It is critical to know if these are people one wants to spend a considerable amount of time with.
With cash flow concerns, most new companies offer scaled-down benefits. Ask the questions, “Can you live with the benefits that are offered?” For some people, it’s not a problem, but for others it is. The company may not offer 401K plans or retirement or health insurance. They offset this with the offer of stock options. Tolerance for risk pops up here too. In the long run, the payoff of a start-up company can be great. The question is can one make it to the payoff when and if it occurs.
Potential to earn money with stock options
Ability to create and direct one’s job
Opportunity for career change
Opportunity to join with visionaries
Loss of job due to company merger or acquisition
Each size company has its own personality quirks, flavor, strengths, and weaknesses. Knowing what to expect from each size business along with a good dose of self-knowledge will go a long way toward contributing to job satisfaction. Understanding and assessing the pros and cons prior to accepting a position will help diminish frustration and lead to a satisfactory job search.
How to Create a Business Plan for a Start-Up Company
In today’s world of business, many individuals are driven to create their own businesses. Establishing a start-up business, regardless of how large or how small, requires the development of a thoughtfully prepared business plan.
Business plans provide direction and clarity. They keep the start-up business focused on long-term objectives and vision for the future. Following these clearly defined steps will lead to a concise business plan that can be enhanced and updated as the business evolves.
Description of the Business
One of the most important aspects of a business plan is the description of the overall business. This is often referred to as the Executive Summary and it explains the purpose of the business. It includes information about who owns the business, management biographies, the primary products or services, where it is located when it was established, and why it exists.
Including information about how the business solves a customer’s problems is an important component of the Executive Summary. For example, explaining that the products offered will make it easier for customers to quickly find unique home accessories at an affordable price is a good value proposition. Stating that the business will create professional resumes and portfolios to help individuals find the right job quicker is a valuable service. Let the target audience know what’s in it for them.
The Executive Summary is also a good place to include brief information about the company’s driving principles such as integrity, customer relationships, and value.
The mission statement is a valuable part of the business plan since it touts the value of the business to customers. It is the statement of the business purpose. Perhaps the mission is to provide a unique, international selection of home decor products at an affordable price. Maybe the mission is to create professional, compelling resumes that focus on the rapid placement of executive-level professionals.
The mission may also include statements such as the focus on the highest levels of customer service or reducing the time it takes to find a job through a broad range of networks. Focus on the most succinct way to define the mission and share it in the business plan.
Marketing Strategy and Audience
A well-written business plan includes a marketing strategy that focuses on the types of promotion, advertising, and outreach involved. It also includes an evaluation and dissection of the competition based on the SWOPTs — or strengths, weaknesses, opportunities, problems, and threats from the competition. A clear understanding of the competition strengthens the business model and provides valuable information to differentiate the business from similar businesses.
The marketing strategy should also include ways to set the business apart from the competition and create a product or service niche if that is one of the goals. Niche businesses do not cater to a huge audience, but they focus on a very specific targeted audience for success.
The strategy should take the target audience into consideration. Include data about the client demographics and define the primary customer. This helps drive the marketing strategy. Different strategies are utilized for a target audience of females between the ages of 25 and 39, and an audience of females between the ages of 62 and 75. Stay focused on the target audience and understand their buying patterns and unique needs for the best marketing strategies.
Financial Analysis and Reporting
Include components of the financial analysis in the business plan such as a projected balance sheet, revenue projections over a period of time, break-even analysis, capital equipment and supply listing, Pro-forma cash flow, and any other relevant financial information. This serves as a roadmap going forward and helps keep the business on track and financially solid based on plans.
Pricing strategy, sales forecast, and other financial aspects of the business must be clearly defined.
Keys to Success
This component of a business plan is essential for future success. What drives the business forward? That’s the key element of this section. Whether it’s online sales, a brick and mortar boutique, outstanding customer service, or a unique product offering, be sure to include it in the plan.
Follow that up with objectives towards success such as maintaining profit margins of x%, increasing product awareness through online advertising, enhancing online presence through forums or social networks, or maintaining low levels of inventory. Decide what is needed to succeed.
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