How to Choose a Star Business Employer

The best thing that can happen to you is to get an opportunity to work at a star business. Even if you don't get stock and associated riches, you get the opportunity to be part of a success story. The reputation and confidence that you get when your company succeeds will be more than worth it.
So how do you identify star business? Here are some clues:

1. Differentiation - Is the company's offerings unique? Are there any others offering stuff similar to what the company is offering? If yes, then run away. It's either a question mark or a dog.

2. Industry Growth Rate - Is the industry in which the business operates growing at more than 15% per annum? If yes, the company has a chance to grow even faster.

3. Niche Leadership - Is the company claiming to be a leader of a niche inside the fast growing industry? Is the company creating and growing a whole new sub-category? For example, if a company is in the area of social networking (a fast growing category) but offers social networking for black people or new mothers (niche leadership) then this is a good sign.

4. Market in the Gap - The company that you have identified may have identified a gap in the market. But is there a market in the gap? Can your customers afford the products being offered by the company? Do they need it real bad?

5. Industry Structure - Think about the structure of the industry. Is there cut throat competition driving prices down? Are there substitutes poised to take over the company's market? What about customers? Do they have a lot of choice? What about customer affordability? Can customers afford to pay a good price for the goods offered by all of the competing firms put together? Or are all of the competitors fighting for a share of a shrinking wallet?

6. Business Model - Differentiation, Industry Growth Rate and Niche Leadership are important things but what about the business model of the company in question? Is there a clear plan towards revenues and profitability? Do you know who the users for the products are? Who pays for the product? When do they pay? Do they pay on a monthly subscription basis? Or do they pay at the end of the usage cycle? What are the risks for the revenues? Can revenues dry up quickly and suddenly?

7. Cash Position - Does the company have enough cash to survive until it hits a cash flow positive state? Usually if it is a star business, it will be able to line up investors. But even the best of the best positioned companies can go bankrupt during bad times. Does the company have the headroom to survive a negative black swan event?

8. Simplicity / Clarity - The best business (as Richard Koch says in his earlier book - the 80/20 principle) is one which is big and simple. In other words, it has fewer products, fewer customer types, fewer vendors, fewer employees, fewer investors. Is the business you're evaluating a complex business with many products, many types of customers (big corporations, small businesses etc.) and many types of business models? Then this is a danger sign. Management may get overwhelmed with the complexity. Tread carefully.

Good luck with your job hunt!