By Mary Ellen Slayter
Washington Post Staff Writer
Sunday, September 2, 2007

It sounds like a dream opportunity to Jack, a part-time musician -- the chance to trade his mundane day job for one in the music business, at an old friend's start-up.

The friend has venture funding lined up and has a product that Jack is confident will sell.

The promised pay is good, with room for advancement, and the work excites him.

But Jack is no fool -- he has two children. "I need to be confident that I'm entering into a well-thought-out plan with significant potential for success, especially so since I have a family and need to reduce the risk of signing on with a company that could implode within a few months," he said.

His field: risk management. (He spoke on condition that his last name not be used, since he hasn't decided whether to leave his employer.)

"What I'm weighing mostly is whether or not this company will at best provide a satisfying job in the music industry that will grow financially and at worst keep me at a stagnant salary with the opportunity to network," he said.

Objectively, he thinks the company should be successful. "What they're offering services a legitimate need that no one's really addressed. They've had success on a very small scale and are now looking to expand."

But he has never worked for a start-up, much less one that comes with the baggage of working for a friend. He wonders what he should ask the business partners, his friend -- and himself.

The investors are the easiest to deal with. They are, after all, mainly looking at the bottom line, and anyone thinking of working for a start-up should be, too. Ask to see the business plan, as well as an any contracts related to the funding. Inquire about their expectations; they should have objective benchmarks. Are they reasonable?

Leigh Moore, a career coach in Atlanta who also worked in the music business, said it's worth having a lawyer review the start-up's documents. Hire someone who specializes in small businesses.

Also, find out what the backup plan is. What if the company isn't self-sustaining by the time the funding runs out? Does the owner-friend have a backup source of money to keep things afloat? Will he expect employees to take a pay cut?

One of the most important questions should be about ownership. If Jack is taking on a risk by leaving a steady job, it's reasonable for him to expect compensation in the form of an equity stake.

Never make assumptions about pay and ownership, said Marilyn Goldman, a career counselor with offices in the District and Rockville. Whatever promises are made should be put in writing. "People forget," she said.

Things with his friend can get a bit sticky. "It is so hard to go into business with friends," said Malcolm Munro, a career coach in Germantown. "It's like going into business with family."

You really have to examine the relationship. Can it withstand the pressure? Will you be able to say the tough things that need to be said?

"In a sense, it's a marriage," Munro said. "And if there was the business equivalent of a prenup, that would be wise." Because when the partnership breaks up, "it can be more devastating than when it's just two business partners."

Goldman said success with this depends in part on maintaining boundaries. "Playing too many roles gets messy." If you're going to work for friends, it's best to separate professional everyday activities from the social activities.

Perhaps the trickiest questions of all are those he needs to ask himself, though. What is his personal appetite for risk? How can he mitigate his own exposure?

Anyone considering a leap like this has to take a close look at his or her bank accounts and household cash flow. Can a working spouse cover the gap if the business falls apart? What about benefits, such as health insurance?

Another consideration is how quickly the person could find a new job. To shorten that span, he or she should continue to maintain contacts and professional affiliations in the old field awhile. Poke around and see if there's a possibility of returning to the old job if need arises.

But safety shouldn't be the only concern, Moore said. "After the due diligence is done, it is important to check in with the heart," Moore said. "Life is not just about steering clear of any risks or entering into situations with our heads stuck in the sand. There are experiences that make us feel alive and passionate, and those can be very valuable."