You are well on your way to fulfilling your dreams as you consider an offer from a startup. The homework has been done. The company’s model is sound. You see great potential in its future. It is an offer, so the door is open to #negotiate. As a startup, though, you have to consider the possibilities from a realistic perspective.
The critical question is how to negotiate your salary at a startup that is in its fledgling stage but could soon experience wildfire growth making it capable of better compensation.
These are the do’s and don’ts of how to negotiate your salary at a startup:
DO
- Research The Numbers–Research salaries for similar positions at companies that are not only in the same industry, but of comparable size. Next, consider the company’s potential for financial growth within the next few years. You may want to conduct a pre-IPO research. Here, let me google that for you. Once you determine the viability of the company, examine your own situation. What is the absolute bottom line you could accept and still live the life you want? Establish your baseline, determine a potential earnings ceiling, then you have the numbers range to work with.
- Consider Equity– Some offers will include equity. If an offer does not include equity, this could become a negotiating point to sweeten up the offer. Ask exactly what future potential there is for equity. Whether equity is part of an initial offer, or a future prospect, determine its value and the percentage of the company it represents. Post-IPO determination of equity value is easy. However, if a company is in pre-IPO stages many different factors come into play. Although there are many formulas that can be used, it may be simpler to ask the founders of the company which formula they used, what the total number of shares are, and if there are any future plans to increase the number of shares.
- Prioritize– The art of negotiating is for everyone to walk away feeling like a winner. Meet face to face and have a conversation about what really matters to you the most. Present your case honestly and back up your arguments with data. Although perks like paid vacation time are great, overall, the most valuable priority of any job is salary. However, if it’s just not possible for a company to meet your salary desires, you can then turn to the potential of equity for increasing the value of their offer. Or, go start your own without paying yourself a salary...
Don’t
- Make It Personal– Prospective employers do not need to know how much your child’s private school tuition is or what your mortgage commitments are. A meeting to negotiate a job offer is about what the company can do for you and what you can bring to the table in return.
- Argue Incentives– Incentive based compensation (MBOs) is often a feature of larger companies. It is not practical to expect it with a startup. For a startup, the focus is growth, rapid growth preferably. Incentivized bonus based compensation generally does not come into play at the startup stage of the game for companies. So, stick to salary and equity.
- Wait Too Long– Time is a critical factor where employment is concerned. A startup has to become productive quickly. When negotiating, stick to the most important factors, salary and equity. Keep negotiations simple and seal the deal quickly. Negotiations should be a basic 3-step dance:
- Offer from a company
- Counter offer from you
- Acceptance, rejection or counter offer from company
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This was originally published at handshakin.com/blog
