The Pros and Cons of Working for a Startup

By Indeed Editorial Team

Updated June 21, 2022

Published July 23, 2020

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Working for a startup is becoming an increasingly common goal among young professionals, and the allure of this career choice is certainly easy to see. From flexible schedules to the opportunity to learn the ins and outs of a growing company, employment at a startup offers several benefits. However, it's also important to know the potential disadvantages of this career choice. In this article, we explore what a startup is and the pros and cons of working for a startup.

What is a startup?

A startup is a newer company that's founded by one or several entrepreneurs. The goal of a startup company is to offer a unique service or product to the market and in doing so solve a particular problem that consumers face. Startups are typically shoestring operations or operations that have only a small amount of money for funding. For this reason, initial funding often comes from the founders themselves or families and friends. Once the startup is more established, funding is often provided through investors and lenders.

Read more: What Is a Startup? Everything You Need To Know About Startups

Pros of working for a startup

There are several pros to working for a startup, especially for those who are new to the professional world such as recent graduates or young professionals. Choosing to work at a startup can offer several benefits, including:

  • More opportunities to learn

  • Flexible hours

  • Unique experience

  • Lots of workplace benefits

  • Increased job satisfaction

  • Minimal supervision

  • Opportunities for innovation

More opportunities to learn

Many startups will give their employees a lot more responsibility than more established companies. This is because startups often can't afford to hire several employees who each have a different responsibility within a department. Startups often hire their employees based on a certain skill set each employee possesses, but often end up giving each employee a larger role within the organization to compensate for the lack of employees as a whole.

This can be a big benefit, especially for new professionals, because it offers ample opportunity to learn things that you probably wouldn't be exposed to in a corporate or more established organization. Additionally, because the founders and employees of startups often work together, you'll have direct access to the people behind the startup and will be able to learn from them every step of the way.

Related: How Do Startups Work?

Flexible hours

Many startups offer employees the opportunity to work flexible hours, and some startups even allow employees to work from home if they choose. This is a great perk for professionals with an active home life or with regular responsibilities outside of work.

Unique experience

Working for a startup is often unlike working for any other type of company. Because of this, employees of startups often get to enjoy a unique experience that isn't available elsewhere. For example, some startups offer nap pods or a nap room where employees can take a quick nap at work, while other startups may provide daily catered lunches to employees.

Benefits

Startups often provide their employees with several benefits to keep their employees satisfied and ensure work satisfaction is at its peak. Common benefits offered by startups include:

  • Free drinks and food at work

  • Free gym memberships

  • Discounts on services or goods offered by the startup

  • A casual environment in which to work

  • Flexible hours and work-from-home options

  • Unlimited paid-time-off (PTO)

  • Pet-friendly workspaces

  • Shorter work weeks

Increased job satisfaction

Employees who work at startups often experience more job satisfaction because they are typically more involved in the growth and evolution of the company. Knowing that you are actively contributing to the success of a company is a great feeling and can significantly impact a person's overall satisfaction with their work. Also, because startups often have significantly fewer employees than other companies, the founders and leaders of the startup tend to put more effort into ensuring employees are happy at work.

Related: How To Improve Employee Morale and Job Satisfaction

Minimal supervision

Another great perk of working at a startup is the often minimal supervision that employees work under. Because there are often few employees who work at the startup, supervision is more difficult to spread across each department. This means that employees are often allowed to make their own decisions within their professional roles and have the opportunity to contribute to the progress of the startup.

Opportunities for innovation

Employees who work at startups are often given ample opportunity to show off their knowledge and skills in a way that contributes to the development and success of the startup. Whereas more established and corporate organizations tend to have a chain of command in which ideas must flow through, employees can take their ideas directly to the top at a startup. This is especially beneficial for more creative individuals who regularly come up with exciting innovations they want to share with their team.

Cons of working for a startup

While there are several benefits of working for a startup, there are also potential disadvantages you should be aware of when determining if this career path is right for you. Potential cons of working for a startup include:

  • Uncertain job security

  • A heavy workload

  • Long hours

  • Less pay

  • Lack of structure

  • Constant change

  • Limited resources

  • Too much freedom

Unsure job security

According to data from the Bureau of Labor Statistics, only 50% of startups with employees make it past the first five years of business. Tech startups are particularly susceptible to this as the threat of technological advancements and new and improved innovations can put them out of business.

For these reasons, working at a startup often does not guarantee job stability or security. For example, some employees work with a startup that's only in business for three years, and after that period of time, they have to find other work due to the startup shutting down.

A heavy workload

Working for a startup usually comes with more responsibility than in a more established company. For some, this is a benefit. For others, this can cause work-related stress due to the heavy workload and responsibility placed on them. Burnout and stress are more common in startups that give their employees significant responsibility and responsibility that goes beyond their skill set.

Long hours

Many startup employees are required to work long hours with limited vacations and holidays. This is especially true in the early days of the startup, as these new companies must quickly capitalize on trends to experience early growth. While the work schedule is often flexible, startup employees will still often be required to work longer hours than what's required at a typical 9 a.m. to 5 p.m. position.

Less pay

Many startups are unable to pay their employees what they're actually worth until the startup begins to see significant growth and an increase in revenue. As a result, working for a startup often means less pay than what you'd make at a more established company.

Lack of structure

Startups often lack structure as the leaders and founders tend to blend in with the employees. Rather than having a clear hierarchy of power and influence as with more established and corporate organizations, it's easy to get confused as to who is overseeing what in a startup company. This can sometimes leave employees feeling unsure of who they should go to regarding a particular issue and can result in workplace confusion and uncertainty.

Related: Your Guide To Functional Structure for Business: Advantages and Disadvantages

Constant change

Change is often constant in startups. From heading in an entirely different direction on a project to switching up the roles of employees with little notice, the titles, responsibilities and roles of startup employees are regularly changing. This can be a disadvantage for professionals who prefer a more stable and predictable work life.

Limited resources

Resources for professional development are often limited among newer startups and may not start being available until the startup is more established and bringing in ample revenue.

Too much freedom

While ample freedom is great and even preferred by some professionals, too much freedom can be a disadvantage for others. Startups often provide significant freedom to their employees and expect them to thrive under these conditions. However, if you'd prefer to focus on only one skill or task, the amount of freedom offered by a startup may not be a good fit for you.

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