Ok, Jim. I get it; there are a lot of opportunities to be derived from employment in small, emerging companies. So just what are these companies looking for as an ideal candidate? That is a very good question! The job-seeker must understand that the small company environment is very different from the majors and not necessarily the right place for some. In a small company, people have fewer resources to tap and a broader range of responsibility. You will be required to ‘wear more hats,’ so to speak. It is a ‘roll-up-your-shirtsleeves,’ ‘player-coach,’ environment. Decisions are made on a shorter cycle, but their consequences may be far greater. You will be required to work outside your comfort zone on a regular basis. Success in a small company environment does not come naturally to most people. For those of you still employed by a major company, you may be thinking; “this does not sound very different from my current situation and work-load.” The fact is that major companies still have an infrastructure that serves to minimize risk and keep the business on track. In the small company, you become that infrastructure. It is only reasonable to expect hiring managers to seek out candidates who have already made the transition from the major company to the small company environment.
Speaking from personal experience, my clients prefer prior small company experience, backed up by a solid foundation in the Fortune 500. The ideal candidate should have at least three to five years of small company experience under their belt. With that transition experience the candidate knows for certain that she is a fit with the requirements of a small company. The client is assured that the candidate understands their needs at a visceral level. If the small-company is owned by a Private Equity Group (PEG) more than likely they will prefer candidates who have worked in a PEG-owned situation. Specific to CFO searches, Public Accounting experience with a Big Four Firm, including the CPA designation is very desirable. A CPA earned while working in the private sector is also useful as is an MBA. I have also found that the small, emerging company is more receptive to the mature executive. They seem to appreciate the experience, particularly the battle scars that come from time in the arena. This is another solid reason to consider the small, emerging company as a viable career option.
Well, how does one get small-company experience to begin with? Another good question. How does one get the experience, if prior experience is required? There are exceptions to every rule of course, but like any other job search one’s network usually leads to the opportunity. Prior relationships are the gateways to new opportunities. Since most of my clients are franchisers, senior managers usually know a lot of franchisees who may need their services. This is the most natural progression pathway to a small company. Visibility within trade and professional organizations is another time-tested way to build a network which may lead to small company employment opportunities. People who know you and know of your work history are more likely to give you that first opportunity than someone who doesn’t know you. These network contacts can be helpful presenting your credentials to other small company hiring managers outside your network. In some cases, experiences in a small division of a major company or work in a joint venture between major companies may be the pathway to a smaller company. It is not impossible to transition from a major company to a small company directly. As with all job openings, it ultimately depends on the requirements of the job, the objectives management expects to be accomplished by the particular hire, and the profile they have established for the ideal candidate.
The small-company environment can be every bit as volatile as that of a major company. Family owned companies can be even more problematic. I am excluding family-owned and managed companies from consideration in this post. I am certain that there are a number of books that have been written on that subject. Volatility risk must be acknowledged and understood when making the transition to a small, emerging brand. It is not uncommon in the best of times for small companies to fail or to be sold as a result of the owner’s personal issues. The past five years have been particularly troublesome for small and large companies. The volatility has been greater than normal. It has been a difficult time for small-company CFOs as demonstrated by their resumes. Short tenures may be a real turn-off for hiring managers making the next employment opportunity more difficult to obtain, increasing the financial risk to the candidate. It is important to help mitigate this risk by negotiating a severance package in the event that the candidate loses his job for reasons beyond his control.
Compensation packages may be lower in a small company, but they will be competitive with the particular market and region of the country. If it is a PEG-owned company the compensation package may include a modest equity component, usually reserved for key, C-level executives. In many of these situations, a CFO for example can expect an equity stake as a part of the total compensation package. 1% at a change of ownership event is typical when a CFO candidate joins the company. Over time, it may be possible to earn a greater equity position if you are a solid performer who management wants to retain. A successful small-company experience can propel one to a very comfortable lifestyle, providing the credibility and confidence to repeat that success in another situation. The opportunity to build significant wealth from the association with a growing business can be very attractive.
Another primary reason my candidates are interested in the small-company situation is to become a greater part of crafting strategy. To become a part of the inner circle, helping guide the direction of the company is very appealing, especially for a company with upside potential. So, beyond the financial benefits of joining a small company, the intrinsic benefit derived from becoming a key decision maker is very attractive to many professionals.
To summarize, the small, emerging company market must be a consideration when one plots their career path. The small company environment is different than the majors and may not be the right path for everyone but will be viable for many. It can be especially attractive for the mature professional and the more entrepreneurial job seeker. The risk/reward equation is not unlike that found in a major company but the issues are somewhat different. If you are currently employed in a major company you should begin building a network into the smaller company segment to move your career in that direction. If you are between situations and do not have prior small company experience try to work your network in that direction. This segment is where the growth is and must be a serious consideration for someone interested in building their career.