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Start-up versus corporate: which one’s for you?

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This article was published in the 10-July-2014 issue of Finweek Magazine

My former boss Kabelo ran his own business before moving into the corporate world. So he had a valuable perspective on both the corporate and the entrepreneurial “be your own boss” environments. At that time I had only ever worked for a large company. One day in the car park we were both admiring a sleek, red Aston Martin convertible. Kabelo roused my interest in the start-up world when he said, “Want to own that car? You won’t do it working here. But you might if you start your own company, because you’ll write your own paycheque. Think about it.” Of course, he hadn’t quite cracked it himself, but his words made a lot of sense.

In this article, we unpack the pros and cons of working in a start-up versus a corporate. Hopefully this will help you decide whether you should work for someone else or start your own business.

So what are the positives of working for a large corporate?

  1. Access to physical and developmental resources. Working in a big firm means you have access to a wide range of resources. These range from training courses to extra qualifications or corporate travel. And the company usually picks up the cost.
  2. Access to people resources. With lots of staff and diverse experience in a big corporate, you can tap into a ready supply of more experienced colleagues and in-house experts for advice, support and mentoring.
  3. A strong brand on your CV. Having a reputable company on your CV can open doors, particularly when you’re changing jobs within the same field. If you’re applying to Monitor for a management consulting role for example, chances are your past experience at McKinsey will make Monitor’s hiring team look on you more favourably. Also, corporates love to poach talent from their competitors, not only because it hurts their competitors to lose good people, but also because they gain insider knowledge into how their competitors operate.
  4. Extensive support. When you progress into a more senior role, chances are you’ll have a personal assistant to pick up your admin.
  5. Job security. Gone are the days of working for a company for life, or even 20-30 years, like the Baby Boomer generation did. Nevertheless, if you’re risk-averse, working for a large company does offer more security than a start-up. While a start-up’s future is often more tenuous, usually a big corporate will be around tomorrow. So you can probably bet on getting your salary and benefits at the end of each month.
  6. Predictability. If you want routine and are more comfortable knowing your job description and what tomorrow will bring, then you’ll probably be happier working for a large, established company. There tends to be a steadier, more repetitive work pace and less volatility than in a start-up. Also, being slower and more established, drama usually happens less often.
  7. Career opportunities. Corporates usually have established steps in a chosen career path. For example in the clinical research field in pharma companies, we typically started out as clinical trial assistants, then became CRAs or clinical research associates, senior CRAs, Lead CRAs and so on. So with time you’ll get a feel for what’s to follow in the career ladder and how to take the next steps.

 

However, you need to consider the negatives of working for a large corporate:

  1. Change happens slowly. Introducing changes in a large business is analogous to making a U-turn in an ocean liner. It’s slow, unwieldy and unbelievably frustrating. Very often, the red tape kills any entrepreneurial spirit or drives entrepreneurial thinkers to leave the company. The result? Monotony and repetition for those who stay behind.
  2. Micro-specialisation. With so many staff and so many different departments, chances are you’ll have a tightly defined job description. So rather than being exposed to and learning about all aspects of the business like you would in a start-up, you’ll become a deep expert in your functional area and may not get the opportunity to branch out or explore other areas. Speaking from personal experience, this is great if you want to specialise in that field, but a big barrier if you’re looking to change careers. Also, you could run up against the frustrating silo mentality. So if you or a customer are looking for help, corporate colleagues may respond with “Sorry, I can’t help you, not in my job description.”
  3. Can you play political games? With so many different characters, hierarchies, departments and cliques in a big firm, every day brings with it lessons in politics and tact. Is this a plus or a minus? It all comes down to how adept you are at playing this game.
  4. Questionable decisions. It can be maddening when management makes decisions that seem questionable to the people on the front line. Why does this sometimes happen in corporates? It could be because some managers don’t know better, since some directors may not have experienced all roles/departments in a big company. Or it could be because management’s primary goal is to keep the shareholders happy, even if this conflicts with the needs of customers or staff. Either way, it can be extremely demoralising for those affected.

 

On the other hand, working in a start-up has some compelling advantages:

  1. The value of hard work, ownership, and self-reliance will inspire you. Possibly the most rewarding element of a start-up is the personal fulfilment that comes from doing something for yourself. Only when you’ve created something of your own, something palpable and whole, something you can touch, see or use, will you truly learn to value personal ownership. For people who do not create, or who create for someone else’s gain, it’s hard to grasp the significance of personal ownership and the freedom needed to make that a reality. Working at a start-up and creating something successful out of nothing gives you tremendous self-belief and pride in your work. Just knowing that your actions can make or break the business is incredibly motivating and exciting. You won’t get that rush in a corporate.
  2. In a start-up, you create your own future. Granted, it will be exceptionally hard work, very long hours and poor pay for some time. Not to forget lots of instant noodles for meals, as Rich Mulholland says. But there’s no better opportunity to accelerate your earning prospects and to explore any direction of work that grabs you. It definitely beats the monotony of climbing the corporate ladder.
  3. Big career opportunities, greater responsibility and more exposure. Because your job spec is so broad, you’ll have opportunities that you’d never dream of in a corporate job. Huge opportunities to step up and lead. As your start-up grows, so do your responsibilities and experiences. Careers can move much more quickly within start-ups than in big corporates.
  4. Unpredictability. Does thinking on your feet, honing your entrepreneurial skills and jumping into unchartered waters excite you? Then a start-up is for you. However, if this terrifies you, rather stay in corporate.
  5. Wearing lots of hats develops a holistic understanding of business. The well-known expression “other duties as required” is often the norm. Start-ups are invariably small teams with loosely defined job roles. So you’ll get involved in all sides of the business. It’s not uncommon for start-up staff to tackle whatever work needs to be done, from web development to marketing to finance. This fosters fantastic teamwork. More importantly, this learning by doing means you’ll grow your understanding of a complete working business tremendously – from finance and sales to HR and operations. It’s probably the most valuable, well-rounded work experience you can get.
  6. Flexibility and freedom. If you want to put in an all-nighter and come to work late the next day, you can. Wearing jeans to work or working from home in your pyjamas is also OK. If you need to take your kid to karate in the afternoon, you can. In start-ups it’s about getting the job done and getting results, it doesn’t matter how you do it and the hours you do it in. (The caveat, of course, is to keep this culture to your start-up team and to make sure you’re still professional with your clients and customers).
  7. Passionate, innovative people. In start-ups you’ll find passionate, excited and driven people. People who are working there because they want to be there, more than anywhere else. People who don’t give up in the face of adversity. People who find a way to make things work. People who find solutions to problems. People who see opportunities where others see crisis. You cannot help but be infected by the energy and creativity of team members that believe passionately in an idea and are working to build something tangible out of it. This energy helps you get through the tough times, the long hours and low pay.
  8. Working smartly and frugally. Start-ups are short on money, and resources are limited. So everyone looks for smart, creative ways to achieve more with less. This spreads into your personal life. You’ll find new ways of getting fulfilment, instead of burning the money you earn. Chances are you’ll develop a passion for creating and doing, rather than simply consuming. This is one of the greatest skills you can learn and pass on to your kids.

 

However before you take the leap, consider the negatives of working at a start-up:

  1. Here today, gone tomorrow. Most start-ups fail. Nevertheless, the failure rate varies, depending on how you define failure. This is according to Shikhar Ghosh, a senior lecturer at Harvard Business School who has held top executive positions in a number of tech start-ups. Where failure is defined as investors losing most or all the money they injected into the business, the failure rate sits at 30-40%. If failure is failing to realise the anticipated return on investment, then the figure climbs to 70-80%. And if failure means not meeting a projection, then the failure rate climbs to a daunting 90-95%. So start-ups are not for the faint-hearted. A strong nerve and a healthy tolerance for risk all come in handy.
  2. There’s no guarantee that you’ll be successful. Yes, you can write your own (big) paycheque. And this is the entrepreneurial dream. But sadly, it seldom happens. Many start-ups eak out a living as small businesses, or close down within a few years. So you need to be realistic about the risks and have an exit strategy.
  3. Little formal support. If you want to delegate your admin to a personal assistant, chances are you won’t get this in a start-up. You can’t rely on other departments to pick up the work you can’t manage or have little expertise in. There simply aren’t other departments, and little if any formal support. However nowadays on global freelance sites like Elance, you can find quality virtual assistants cost-effectively, especially in countries like India.
  4. Low pay, long hours. With minimal pay and 16-hour days often the norm, especially in the early days, a waiter will probably earn more per hour than you do. And a big corporate salary may look very tempting. So if you work for a start-up, you need to have a long-term outlook on your earning potential. The big question is: how long can you hold out in this situation before you’re forced to close shop?

 

So, which is best – corporate or start-up? And which option is best for you?

This is a deeply personal choice that comes down to two fundamentals: your outlook on risk and your experience. Working for big business is less risky. And if you’re short on work experience, then the resources and different job types in a large company can work in your favour. But, if you have an entrepreneurial flair and the thought of climbing the corporate ladder to get that fancy corner office and a personal assistant doesn’t grab you, then a start-up could be a better fit.

From my own personal experience, it helps to start your career at a big corporate and then to go it alone when you’re ready. Make the mistakes, get the work experience and the learning while someone else is paying your salary, and then take the plunge with your own start-up. If you can find this happy medium, or even better, work at a big company that thinks and acts like a start-up, that’s the best of both worlds.

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Author: Colette Symanowitz

Managing Director of www.BeatingBullies.com and www.MBAconnect.net. Passionate about entrepreneurship, personal branding and networking. I also tweet under @mbaconnect_net and @Beating_Bullies

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