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Summary:

As a freelancer, I get the chance to work with startup companies that are still too new or too small to have a lot of in-house staff. Because of this, I’ve become familiar with the common characteristics that many startups share. As I come to expect […]

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As a freelancer, I get the chance to work with startup companies that are still too new or too small to have a lot of in-house staff. Because of this, I’ve become familiar with the common characteristics that many startups share. As I come to expect these characteristics with new clients, I become more efficient at avoiding problems and maximizing opportunities.

But first, a definition: What exactly is a startup? Although the term “startup” is usually associated with tech companies, it’s not necessarily that specific. As long as the business is young, usually still in development, then it can be considered a startup.

The first common trait that most startups have is their tight or unpredictable income. Usually they are bootstrapping (working without external funding) which leads them to minimize their expenses. Even if they have the benefit of external funding, startup founders still tend to keep a close eye at their cashflow. Some of them might be looking for low freelancer rates, or perhaps some prep work to justify your cost. You shouldn’t be selling your services as an added expense: talk about your fees as an investment.

To minimize any negative effects a startup client may have on my own finances, I tend to bill early and send reminders before the due date indicated on the invoice. This sometimes isn’t necessary, but it can be useful, especially if the people in charge of paying you are wearing too many hats or paying attention to several other aspects of the business —  a common situation in startups.

Also, if you’re working with a startup, you’ll be dealing with their growing pains firsthand. This means you’ll be part of an exciting and interesting stage in the development of their business. While this stage is typically filled with new ideas and innovation, there will also be a lot of mistakes, which will often affect your work. They might even be a bit disorganized, since they don’t have standard processes in place.

There might even be major changes when the founders get a better (or simply different) idea of what they want to do. One of my earliest freelancing jobs was writing web site copy for a tech startup. When they hired me they were developing a simple chat application. By the time I left them six months later, they had plans to turn their app into a full-featured social networking tool. Because of possible changes like this, it’s important to keep communication lines open so that you’re updated with the latest developments. Startups are flexible organizations, and you should also be equally flexible as you work for them — as long as you are treated and paid fairly.

There may be some exceptions, but I usually find that working with a startup is also like working with a small, close-knit family. They often don’t have a large staff since they’re just starting out. With few, if any, bureaucratic hoops and hierarchies to deal with, getting feedback and disseminating information is usually faster. In fact, you may be working directly with the founders.

Although working closely with the big bosses has its advantages, there are a few challenges you should expect. Sometimes, founders can be micromanagers. They tend to think of their startup as a baby whose every tiny step they should monitor and approve. While I appreciate this devotion to one’s business, too much of it can prevent growth through other people’s ideas, experience and perspective.

Working with a startup certainly has its own opportunities and disadvantages. We need to be expect both these things if we want the working relationship to go as smoothly as possible.

Have you ever worked with startups? What was your experience like?

Image by cobrasoft from sxc.hu

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  1. I’ve been working with a startup company in the renewable energy field on and off for several months. It’s a very exciting time for this company and its potential for success and growth is fantastic, once it begins operations. Right now however all of my work is pro bono as this company awaits funding and plant approvals. Luckily i’m able to scrape by with other freelance gigs while waiting for the company to takeoff.
    Some lessons i’ve taken away from this experience:
    – Study the startup’s business plan carefully before agreeing to work on a pro bono basis. This will indicate whether the risk is worth the potential future reward.
    – Agree upfront on a payment schedule and keep careful track of the hours spent on various projects.
    – If possible arrange for stock shares keyed to the total number of pro bono hours (and the per hour rate) devoted to the project. This could lead to a very big payday down the road if the company succeeds and eventually goes public. As a very basic example, say you’ve put in 100 hours for a startup at $50.00/hr; the company pays you at some point for those hours of course and also issues 5,000 shares of stock in the company worth $1 a share. If the eventual IPO hits $25 a share, well do the math — a very decent return on the time investment.
    Startups are high risk,but potentially very high reward if you’re patient.

  2. I’ve worked with a dozen start-ups over the last several years. So I will throw in on what is a decent article that passes over some important points.

    First of all, I’m not sure where you get the idea that the term “start-up” is “usually associated with tech companies,” but I’ll tell you that simply isn’t true. Out of those I’ve been associated with, ONE has been about technology. And it’s NOT computer or Internet technology, either.

    Second, they aren’t all headed on a path that leads inexorably to an IPO. Some don’t WANT their companies to be publicly owned; you correctly indicate that they come with a family culture, and some would like to keep that. We can of course still earn a piece of the action, but that has a different meaning.

    Finally, there are ways to ensure one is paid fairly that are not mentioned, including barter and delayed payments., :-)

  3. I have worked with a few start ups now, I always say never again and then go right back for more. Its intense, exiting and sometimes depressing. Its always important to become part of the team and remember that you may be the most experienced one there. Treat it as another gig, be careful with promises of “options”. If you think it has what it takes and they give you the paperwork, get it lawyer checked before you do any pro bono work.

  4. The Zaq Stavano Blog » Blog Archive » links for 2009-11-13 Saturday, November 21, 2009

    [...] What to Expect When Working With a Startup (tags: business customer resource self) [...]

  5. Subhasish Ghosh Tuesday, November 29, 2011

    What to Expect When Working With a Startup http://t.co/i1dkqDmC

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