Getting Started: Preparing for the world of entrepreneurial adventure (Risk Management)
Published by CPA Canada in CareerVision
So, you want to work at a start up, or maybe, with that young company that looks like it’s going finally to raise some investment capital. What could be more exciting than that? Or, you might be at a place in your career where we’ve all been: one of seeking out new opportunities and fields where the grass is greener. But, before you leave that corporate job, there are a few things you might consider, because, well, how to put it? Working for a start up is different. Is that bad? You ask. Or, is that good? You wonder. Well, the reality is, it could be both, but really, it’s just different from the world of larger, more established organizations.
Although working with a start up or young (what investors often refer to as “early stage”) company can be an exciting place to be, it’s important to consider some of the other aspects of the opportunity fully before making the switch. Those who haven’t spent much time around the start up world might be surprised to find out what the flip side of opportunity looks like. In this series, we will consider exactly that, so you can make an informed choice, and perhaps, benefit from placing a greater emphasis on developing some of the skills that will serve you well, in advance of when they’re actually needed.
Let’s start with the issue of risk. Although risk, in general terms, can be one of those theoretical areas, when working with a young company, its existence is not only evident, it’s very much real.
Why it Matters
Start up companies, or those in the early stage of development, are usually not short of ideas, enthusiasm, and ingenuity. Their world is often one that is emerging, including new technologies, new ways of doing things, and new markets. The reality is, that although start ups can sometimes lead to success, they more often than not lead to failure (or, more gently put, a learning experience). This might sound like an obvious statement, however, many who are involved in the start up world become so focused on the opportunity that the downside doesn’t matter much. In reality, however, it is always there. A lack of experience (or attention) can result in not seeing the downside for what it really is, including the risk that is associated with it.
One of the things about risk is that the greater you understand it, the greater the opportunity to overcome it. Too many entrepreneurs fail or refuse to acknowledge its existence, resulting in circumstances that too often cannot be overcome (and leaving many wishing they could turn back the clock). In addition, the stresses of living in a risky world, day in, day out, can be too much to bear.
Get started on the right foot by putting risk in its place from the beginning:
- Seek out risk management opportunities: Risk management is a learned skill, so if you’re currently working with a large or well established organization, it can be a good opportunity to learn how to identify and manage risk. This represents valuable knowledge to address risk in future roles, and your start up partners will thank you for it.
- Conduct an honest assessment: Since working with a young company could (and often does) mean uncertainty in a number of areas, ask yourself honestly if this is an environment that fits well with your lifestyle. Can you adapt to an uncertain income stream? Does moving away from a stable environment create feelings of discomfort? What will you do if the business isn’t successful? Ask the tough questions now and be mindful of both your logical and emotional perspectives.
- Plan for the unexpected: In advance of moving into an environment of higher uncertainty, take advantage of where certainty does exist. Saving, completing professional development programs, and seeking out learning opportunities all can be done well in a stable environment and can be something to lean on in leaner times.
- Balance risk and reward: Although it’s true that young companies can be risky places, they can also have rewards, including new experiences, an opportunity to contribute significantly, and commercial success. You might even also get the chance to own part of the company to share in future financial performance. The key point is that risk and reward should be considered in balance, as seeing a situation only for its rewards can lead to trouble.
There might come a time when a start up opportunity presents itself and must be quickly pursued, regardless of your state of readiness. Based on the inherently risky nature of early stage companies, this can be a mistake. Rather than becoming frustrated with the situation, why not get started to plan for becoming well equipped to make the leap to playing a key role in a young company? If this one isn’t right, you’ll be better positioned when the next one comes around.