Skip to main contentA logo with &quat;the muse&quat; in dark blue text.
Advice / Career Paths / Exploring Careers

5 Ways to Know if Joining a Startup Is Worth the Risk

risky jump

No matter what stage you’re at in your career or where you’re working, the startup world is one of extraordinary promise: getting in on the ground floor, making an impact, putting your stamp on the business, being free of corporate structure and politics, and just maybe getting a huge payday a few years down the road.

While this all sounds incredibly exciting and exhilarating, startup situations, by nature, have big risks attached to them. The statistics on success versus failure are pretty profound toward the latter.

So, how do you know if the move is worth the risk? You don’t. However, that doesn’t mean you should just throw caution to the wind. Instead, take some time figure out if the company’s going anywhere and—just as important—if it’s right for you.

1. Ask the Right Questions During the Interview Process

In addition to asking the usual interview questions, it’s a good idea to gauge how the company’s doing and where it’s going. While you can come right out and ask (and you should!), you’re more likely to get an honest and off-the-cuff answer by asking the following three questions.

The first one addresess whether or not the business itself is a good idea. Not in the “I just had a crazy idea while falling asleep” way—but is there potential to make money at it? Ask the founder what marketplace need he or she think’s the company’s fulfilling. All successful businesses must have, at the core, a (hypothetical) customer base who’s going to be into the product. Dig into whether the founder has done enough market research to prove that this is an actually viable business opportunity.

Second: Find out if the leadership team has the ability to make this company happen. Talk to the founders and other executives about their skill sets and backgrounds. When politely inquiring about this, what you’re really finding out is if these people have what it takes to get this great idea off the ground. If they’re not fully equipped to make it happen—are they hiring other people to fill in the gaps?

Last, but not least, you need to know how they’re getting funded, and how they plan to continue getting funded. This is a straightforward question, and you can approach it as such.

2. Get Second Opinions From People Who Know What They’re Talking About

Yes, a startup’s premise may sound like a great idea. But great ideas don’t always translate into profit, or even workplace satisfaction. So, before you sign on, seek out guidance from successful people in your life, talk to your mentors, and reach out to people you know with startup experience. While not everyone will think it’s a good move (especially the risk-averse), even the positive people should be willing to play devil’s advocate with you.

3. Do Your Research

Don’t be scared to turn to Google. Not just to see what’s being written about your prospective company, but also to research the current marketplace, look up the people running the company, and read articles like this and this about what makes a successful startup. Last, but not least, check out the current employees on LinkedIn. It’s a great sign if a number of them left well-known companies to move over. (Not so great if the company only has three employees, and two of them appear to be the CEO’s mom and dad.)

4. Trust Yourself

While you’re interviewing and meeting people at the company, do a gut check. As with any job, you get a pretty good read during the interview process, provided you're paying attention to all the clues (verbal and nonverbal). Since you’re mostly likely meeting everyone—the founders, the idea-creators, the real people who do the work and have a stake in the day-to-day success—you can get a real feeling for how it sounds like it’s going. Yes, you’re going to have moments where you get nervous (like when you hear the base salary), but the overall experience should leave you feeling confident. And if it doesn’t, and it starts to seem like a potentially bad decision, trust that voice.

5. Do Some Quick Calculations

Even if everything sounds like it’s going swimmingly, you need to think negatively—just for a second. Yes, while it may sound depressing, you should prepare for the worst-case scenario—you join a startup, it fails a month later, and you wake up the next day with no source of income. Mitigate your financial risk by figuring out just how long you could survive on your savings if you needed to do so. And if it’s not long enough to complete a full-on job search (typically around three months), stay at your current position until you’ve built enough savings. Remember: Equity is exciting, but it’s generally not considered an acceptable way to pay rent. In life and with careers, it’s fine to take calculated risks, but the key word here is calculated.

Remember that luck only gets you so far. The best career approach and management includes sound and thoughtful consideration, with some calculated risk along the way. This is what prevails and wins the day, time and time again.

A logo with "the muse" in white text.