start-ups-or-mature-companies

In the 8 years from 2006 to 2014 the net new jobs added to the Australian workforce was 1.04 million.  This represents an annualised net increase (that is the difference between newly created jobs and jobs shed) to the workforce participate rate of approximately 1% at June 2014.

But where did these jobs come from?  The logical explanation is that they would have flowed from the big end of town but that is not the case.  Certainly large firms created more jobs but at the same time they also shed more jobs making their contribution to net growth negligible.

By contrast, Australia’s start-ups (described by the OECD as firms that are less than two years of age) were responsible for driving the 1.04 million net new jobs!  And interestingly, this research is in line with similar statistics from the USA with young firms being responsible for almost all net new jobs.

Case studies by the Department of Industry Innovation & Science point to the global arena that many of the start-ups are playing on and consequently their average annual growth that can be 100+% year on year.  One such firm which specialises in the development and commercialisation or medical, technology and clean-tech products grew from 1 sole employee to 90 in just four years.

However, with approximately 6000-8000 high growth start-ups entering the Australian economy every year it is important to remember that they are not all created equal!   Certainly they have a lot going for them – research supports the general opinion that they are more innovative and they are also more likely to display superior management and leadership capability.  In addition, the R&D expenditure per employee is significantly higher for these young Australian firms at approximately $50,000 per employee than mature firms (aged 10+ years) where it is less than $30,000 per employee.

So, what do job seekers need to be aware of when contemplating a career move to a start-up?

  • Start-ups are rarely cash flow positive and so from a financial perspective, your salary may be less than from an established company and it may also be perceived to be more at risk by personal debt providers
  • Employees of start-ups are more likely to be included in an employee share offer than those entering mature companies
  • Aside from financial considerations, start-ups often have their employees cover multiple roles and each with relatively greater responsibility than one would encounter in an established company.
  • Long term benefits can be achieved through this accelerated learning of multiple skills and especially those of adapting to rapid change. As we move through the 21st century these skills will increasingly become paramount to all companies, young and old as disruption by new high-tech entrants challenges the status quo.

Great opportunities for job seekers are there for the taking, whether it is in a mature organisation or a start-up.  Consider your own personality, your stage in life and your career goals and pursue whichever ignites your passion!