Who Doesn’t Dream of Working for the Next Google?

U.S. job growth is driven by startup companies, but if you’ve been offered the opportunity to get in on a company’s ground floor, it’s important to consider potential risks along with the rewards.

Drawing from a 2010 Kauffman Foundation study, Polly Black, Director of the Center for Innovation, Creativity and Entrepreneurship at Wake Forest University, has developed a list of five important considerations for those contemplating joining a startup:

1. Passion. Look in the mirror, advises Black. Long hours and low pay require that you have a real passion for what the small startup company is doing.
2. Financial stability. Evaluate the company’s financial backing. Is it profitable? If it hits a major roadblock, what are the plans to stay afloat?
3. Chemistry. Start ups require a lot of team work, so you need to decide if you fit in with the other employees.
4. Market need. Black says company leaders should be able to clearly articulate the market need they are meeting with their product or service in a sentence or two. If they can’t, that may indicate a lack of focus that could impede the company’s success.
5. Experience. How will your work be balanced between job responsibilities and decision decision-making? Will you be comfortable with the level of autonomy offered?

Interestingly, your evaluation of risk and reward on the employment front is not unlike the work we do to accurately identify your risk tolerance that informs the construction of your portfolio. In both cases, if you take on additional risk, you have the potential to reap greater rewards. Also, as with investing, there are different periods in your life that may be more conducive to taking on additional risks.