Some people enjoy working for larger companies, while others feel more at home in small-business environments. And there are certainly a number of benefits to opting for the latter. Not only do small companies tend to offer employees more attention and flexibility, but sticking with a small shop often means getting to dabble in numerous aspects of the business, thus opening the door to future growth. On the other hand, there are some drawbacks to working for a smaller company that could hurt your career both immediately and down the line. Here are some to be aware of.
1. Lower salaries
Though it's not always the case that smaller businesses pay their employees less than larger ones, things tend to shake out that way. That's because small companies just don't have the resources to compete with the salaries larger ones can offer. So, you could end up losing out financially by taking a job that pays you 10% to 20% less than what you'd find elsewhere.
2. Stingier benefits
Because benefits are pricey to administer, it's often the case that the cost per employee drops significantly when you're working on a large-scale basis. In other words, it may not end up costing a 10,000-person business all that much money per worker to provide great health insurance, whereas a similar plan might be cost-prohibitive for a 20-person company.
And it's not just healthcare you might lose out on. Smaller businesses are also less likely to offer a 401(k). In fact, only 28% of small companies sponsor a retirement plan, according to data compiled by SurePayroll. Granted, if your employer doesn't offer a 401(k), you still have the option to save for retirement in an IRA, but you'll be subject to significantly lower annual contribution limits there.
3. Less formal training
Working for a small business often means getting a fair amount of hands-on education and experience. That said, smaller companies are less likely to offer formalized training as larger ones do, so you could end wind up missing out on key knowledge to grow your career. Furthermore, if you work for a larger company, that training will most likely be built into your schedule, thereby making it more accessible. At a smaller company, that training might be mostly informal, and it might come at the cost of having to work longer hours to compensate for the time you spend growing your skills.
4. Less opportunity for growth
On the one hand, working for a smaller company often means getting to climb the ranks more quickly than at a larger one, since, conceivably, you get to grow with the business. But that assumes one key thing -- that the company grows at all. If you start out working for a 12-person business and it has no plans to expand, then there's a good chance you'll end up in the same position two, three, or four years down the line. But if you work for a multithousand-person company and your performance is solid, you'll probably move up sooner as a matter of course.
Ultimately, the decision to work for a smaller versus larger business will depend on numerous factors, including the role itself, the company culture, and your immediate and long-term career goals. And remember, taking a job at a smaller company will often work out perfectly well. Just be aware of the aforementioned pitfalls before making the call.