Being invited to join a promising young startup
is certainly a boost to the ego. Clearly, your qualifications and experience
have impressed someone enough to offer you a position as director. However, you
have to think like a business professional. Put aside the compliments and ask “Do
I know what I’m getting myself into?”
Because you might be taking a radical
change in your career path it’s vital that you do research before accepting a
position as a director. The following are some key areas you should thoroughly
understand about the start up.
1)
Their Finances
Start with asking, “How much money do they
have in the bank?” and build from there. What you should be looking for are
actual funds and not the promise of investors coming on board. A line of credit
is a good thing for the company to have but without working capital, that
credit can quickly exhaust itself and add to the red ink in a ledger. Beyond
the working capital, you also want to examine the company’s valuation. This
will include income projections versus expenses. Bottom line: You need to get
the complete financial picture.
2)
Their Competitors
Every startup begins with the notion that
they are better than their competitors. It’s your responsibility to take off
the “rose colored glasses” and garner a true look at the marketplace. Their
competitors wouldn’t be in business if they weren’t doing something right. What
exactly are they doing that your startup can’t do? The opposite question
applies as well when asked about the strengths of your potential company’s
abilities. Not only are competitor’s sales important to review but also their
approach to marketing strategies. How will your startup do things differently?
3)
Their Investors
In your new position as director for a
startup you might be charged with the task to bring in new investors.
Hopefully, that company will already have a few investors supplying capital and
intelligence. You would be at an extreme disadvantage if there were no
investors already on board. That might prove to be too daunting of a challenge.
4)
Their Board of Directors
Who will you be working with in this new
venture? This is crucial to understand because engaging in a startup will have
your mettle tested. You might be asked to work long hours with this group in
addition to making other sacrifices in your personal life. Will it be worth it?
It’s hard to judge that until you have some tangible sales figures but you
certainly don’t want to invest your time and energy with a group of directors
who aren’t up to the task. Don’t ever forget that the solid reputation which
earned you the offer to join the startup is the same reputation that will be at
risk.
