One of the most important decisions you’ll make when starting your business is whether to share it with one or more co-founders. Starting a business with a partner means you’ll have more support and resources, but you won’t have the same autonomy and you’ll be sharing your profits with someone else. Therefore, with such high stakes, it’s important to understand what you’re getting into before there’s no out.
The Pros of Starting With a Co-founder
Benefits of having a co-founder include:
- Shared responsibilities
- Support when it gets tough
- A fellow decision maker
- More resources
- A wider network
- Investors like co-founders
There are many benefits of having a co-founder. You will have someone to do half of the work, letting you get a lot more done and not feel overwhelmed. When you’re starting a business, things will inevitably be frustrating and difficult at times, and you’ll have emotional support when for those moments when you really need it. You’ll also have a fellow decision-maker so you won’t be stuck in an echo chamber with only one set of ideas and opinions. Your co-founder will bring more resources to the table, including money and connections. You’ll also signal to potential investors that you have support.
The Cons of Starting With a Co-founder
Cons of having a co-founder include:
- Personal conflict
- Decision deadlock
- Shared income
- Differing work standards
- Different goals and priorities
One of the most common reasons startups fail is co-founder conflict. If you don’t know your co-founder very well before you start working together, you don’t know how they will react in the myriad of situations you’ll face together. You may also run into a decision deadlock when each of you has a different opinion on how things should be done. Just as you’ll have more resources with a cofounder, you’ll also have to split up your profits, meaning you will have less income. In addition, your co-founder may have different work standards than you, which can be frustrating.
If you do choose to work with a co-founder, it’s essential that you choose well and that you make an agreement before you start your business which sets boundaries and anticipates potential conflicts.
What to Look For In a Co-founder
Interview potential candidates and ask for references to see if they have these qualities:
- Complementary strengths
- Similar vision, goals, and values
- Comfortable with conflict
- Emotional intelligence
- Team player
- Loves learning
You will also want to find someone who has a similar vision, goals, and values to your own. Ask any potential co-founders what they envision their life and career look like in the next 12 months, 2 years, and 5 years. Does it align with your vision? What are their primary values? Make sure they match or complement your own.
Make sure that your business partner is comfortable with conflict and has the emotional intelligence to work with you and with a team. Are they able to recognize and manage their own emotions? Do they seem to recognize and understand your emotions?
The Founder Agreement
If you decide that you do want to start your business with one or more co-founders, it’s essential that you make and sign a founder agreement. This will include:
- Ownership parameters
- Roles and responsibilities
- What will happen should one of you choose to leave
- Money invested
For a sample founder agreement and a more complete list of what to include in your agreement, visit rocketlawyer.com
There’s no question that there’s a lot to consider when starting a business, especially if you’re planning on embarking on the journey with a partner. However, much like anything else in the business world, there are numerous benefits and setbacks to the approach. For true success, it’s crucial to think about your business’s goals for the future, and where you want to be as an entrepreneur. Only by asking yourself these questions will you be able to adequately decide whether starting your business with a partner is for you.
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