Should I bring on a co-founder?
I have been planning my business and working on it on the side. I have a friend who has expressed interest in helping. Some people have told me that it is better to bring on a co-founder. The pros would be I wouldn't have to do all the work myself, I would have someone else to motivate me when things get tough and I would share the financial burden of getting started. But I see cons too. What if I end up doing more work or we disagree about the company's direction? I am interested to hear if others have faced this dilemma.
It is always helpful to have someone assist you with the business. However, bringing in a co-founder can also be counterproductive if the person is not able to contribute effectively. You might end up having major differences, and eventually the business may suffer. So, first ensure how you would like to postion your co-founder in your business - for what purpose, to look after which areas of your business etc. Then ensure that your co-founder has adequate expertise in his/her field to be able to contribute effectively. Do also have a clear agreement on the distribution of stakes/holdings and revenue shares. If you plan this properly, it will not backfire and would, rather, help you forge ahead.
See how far you can go by yourself or bring in an assistant initially. Think long and hard about bringing someone else into your business and always remain the majority shareholder; someone always needs to be the boss!!! Friends and business can be difficult...especially if it goes wrong. Interesting article: .http://www.hypergridbusiness.com/2013/10/8-signs-your-business-partner-is-out-to-get-you/
I have a co-founder and I wouldn't have it any other way. However - he and I have worked together on and off for many years, we have the same vision and our skills are complementary.
I personally would be nervous about going into business with a friend (I'm not of the exact relationship) unless you have worked together previously.
It is certainly great to have someone around to share the ups and downs with.
If you do decide to work with the friend you mention, then I would ensure that you spend sufficient time up front setting some basic ground rules i.e. who is responsible for which areas.
Good luck with your new venture and if there's anything we can help with, please do not hesitate to contact us.
Hi - I probably upset a few people now (Sorry !!) I am a so called 'Serial Entrepreneur' - with some significant success under my belt, I may add. Every time I had a 'co-founder' or 'partner' or even 'financial backer' (in whatever form) for whatever reasons - it just slowed everything down. If you can avoid it, run your own show. You do need to be motivated anyway - if you look for somebody else to do that - hmm.. You get motivation from your friends and family - if in doubt - look in the mirror!
In financial terms, build the base on solid ground, document everything from start - it will help in the long run.
I don't know what you are planning to do - but there are so many forums, help sites and crowd funding places...all in all - you shouldn't need a co-founder.
Feel free to send me a private message.
If the main reason you want to bring in a co-founder is to share the financial burden associated with the start-up, then, a legal document with clearly outlined responsibilities is essential. However, if the business relationship is expected to be less formal (at least at first) don't complicate it with discussions of ownership. If you find someone that is as motivated as you and puts in the hours, your business will grow (assuming you have all marketing elements right). At that point, your working relationship will be better understood and equity splits (whether 50/50 or otherwise) can be discussed.
There is no magic word or scheme for bringing in a co-founder until TRUST is understood, EXOPECTATIONS are addressed and outlined honestly, and your "BELLY" (your belly never lies) tells you it is time for a co-founder. One last caveat, it is important that you understand your own strengths and weaknesses and have a co-founder who has different strengths to help fill out the team...
All the correspondents here have made very valid points, some more serious than others. I certainly agree that briniging in a Co-founder from the begining allows you to set up the terms of the partnership, as a free enterprise or as a Limited Liablity Partnership. As many have said, the great advantage is that you have a share issue as you would a Limited Company, but in effect you are joint and several directors with equal values of shares issued.
If the proposed partner is a long standing friend then this is a greater advantage, particulary if they have a skill-set that supports your would be "shortfalls". However be warned that if things did get nast between you and the would be partner walks out, you could be left with a massive whole both in skills and in terms of cashflow.
More seriously if the would be partner/Co-Founder is not known to you or at least not very well, I would reccomend that you do security checks such as:
1. A search of Companies House, to see if they are a disqualified director.
2. They are financially sound (check that out by running a search through Experian or
other Credit Reference Agency,
3. Confirm whether their residential address is subject of a Mortgage or it is rented, and
the length of time they have lived there.
4. Where there is very sensitve information which you are handling, a CRB check is
worth a great deal in terms of the potential for fraud.
Best of luck with your venture and hope that it will run successfully
I have just discussed the situation with a client of mine and am happy to share my advice given:
The co-founder needs to share your goals and vision and commitment to work, otherwise a paid associate is much better. Too many start-ups fail when the starting team has not clearly exchanged their goals and work commitments and divided the shares accordingly...in particular if one partner does more work. That can be addressed in the way you divide shares - more to you, as it is really your "Baby", but an equal salary, you ask for all pre-start-up cost to have reimbursed. Arrange all of that in writing and in the company documentation before trading start.
Talk to me if you want to learn more. Without knowing the business type and sector this is all I can say. Hope it helps.
Hi Kate. This is the age old dilemma and probably one of the most important decisions you will make for your business. If your business needs the capital the co-founder brings, then you may see it as you do not have a choice. For a small start-up two chiefs are a lot of overhead...But for a start-up with a full order book it may be exactly what you need. Can the business support two senior managers?
I would always ask myself; What does this person bring to the table? Do their skills compliment my weaknesses? Do they have the same level of skill as I do or better in areas I need? Do we get along very well, even when times are tough? Can you trust them implicitly? Do they share your vision for the business?
As everyone has already said, there are pros and cons. My final question to myself would always be; do I need them? If the answer is no, then you probably have your ultimate answer.
Hope this helps
Bringing in a partner in any business is a decision that should be thoroughly thought out. What is the motive of your partner? Is it to really help you grow the business or somebody piggy-backing on your great idea? What true value do they bring to your business?
I would personally not bring in a partner especially if you feel you need somebody to help push you. As an entrepreneur, you shouldn't need anybody to push you because if you want your dream to work you make it happen no matter what. I've seen more headaches and friendships gone bad because of money or power struggles.
However, should you feel that a partner is necessary for your business to grow I'd advise making a list of pros and cons and seriously think abou the long term affects. How will you divide workflow? If you get to a point where one partner loses interest are you willing to buy out he/she? Consult an attorney and draw up and agreement if that's the road you want to take.
Best of luck!
The best way is to see if he [or she] would make -you- disagree or would himself do all the work and you have to stop him/her!
Lots of great advice, but in the end you must decide. It's a lot like asking yourself, should I get married? Many times it works well (if skills are complementary, you can both agree on things, etc.), sometimes it doesn't (and if it doesn't chances are your friendship is shot). As a business owner I tried to partner/merge but it never ended up happening. If you can afford it, keep it all for yourself, find and hire good staff, and maybe lean on a good experienced mentor who has actually owned and managed a small-mid size business (like me!). Not a banker or ex-corporate exec unless they've actually run a small company with their own cash on the line.
Hi Kate. Firstly I would like to thank you for sharing your dilemma. For everything you do in your life there are pros and cons. A decision to bring someone on is very personal and it is also dependent on who this person is and the level on intimacy to openly discuss the business points. I will tell you that there are many pros and many other cons of bring someone in and in my personal experience I've partnered with someone to the only reason that in my country, Brazil, when you have a partner, the banks find out easier to give you credit to improve your business. The person that joined in this project with me thinks differently then me in may aspects which in the end makes all pros overcome the cons by showing to me a different perspective, a new angle I wasn't considering. It's more beneficial to me having this partner with me then being alone. But again, it is a very personal decision to make and you need to evaluate not only the points I've listed but everything that may concern you. Hopefully I could contribute with my fifth cent.
I've been debating bringing in a partner or two this year and have decided to go ahead with it. It's going to have to come down to a solid partnership agreement that clearly lays out the roles and responsibilities along with expectations. All of those other upsides you site are huge bonuses and it's what some people, like me at this point, really need.
My opinion is, if you have difficulties gathering financial resources for your business, you can get a partner with a strict contract that he/she is only there as non-managing partner. If you want to bring co-founder because you do not have skills in that particular business (which I highly doubt), you can bring on one, but you are risking that you lose control of the business, due to the fact that your partner has more experience and may leverage that in order to get his/her decisions accepted.
I have tried both options. Weigh the pros and cons carefully.
If you are still undecided, go ahead if:
1. You need to trust your co-founder/partner.
2. He or she has to bring in added value, and
3. Cover for your weaknesses.
I would look at what you really in the business and see if your friend has those qualities. I'd also look at her other responsibilities and see if she has time to work as hard as you. Thirdly, I'd see if your business ideas, where you want to go and how you want to get there match. I have a friend who had a partnership with someone that ended the friendship because they didn't agree on what they wanted the business to do long term (after having been in business together for years). Sad thing is the husbands had also been very good friends and all relationships are now terminated. Just because a friend wants to help your business doesn't mean they need to be a founder. Perhaps you pay her for her expertise as a consultant. You may not need a co-founder.
I don't think you should be thinking of a co-founder as a source of revenue and share of the financial burden. A co-founder should be as said by many a complement to your skills, a source of ideas and support, a way to expand your network of contacts / potential clients and/or partners.
It often brings a higher credibility and seriousness of your business, especially if you plan to grow.
I also say, its better not to co-found with friends, as that is often source of disconcord, but if you do, as has been said, a written and clearly established set of rules / contract of what is expected of each person.
It may also be interesting to find a good partner, with-out co-founding to begin with.
From my experience, I strongly believe, being at least 2 is better than going solo.
It's a nice idea you're planning to bring someone. I've been in partnerships a couple of times with good and not so good results - I am glad and thankful I talk and connect with all of them.
There is always a chance to start on the right feet. You cannot control everything from the beginning, even when people disagree on this (plans are plans), however, you can let things clear when starting. Being you the creator of the business, you have the rights to own more of it and hence to establish strategies, rules and ways of communication when things go tough. It will happen.
Make clear from the beginning that it's hard to be in business yourself (even though you love it) but bringing a partnership make it a little harder - for so many things. There are passions, knowledge, interests and relationships involve that need to be carefully addressed in order to work smoothly. Create a plan of how are you both planning to do this when the time comes. If you are the owner, you are the responsible to set the guidelines for everything. You have to be open to include that new person, to ponder how you both are gonna work doing what, how and what are the rewards to you both; meet for coffee out of business frequently and go over this, talk about what it's happening, about finding ways to connect and embrace both passions and interests for the best of the business. Have your operation agreement ready before you start (learn to document how you've been working and what need improvement) - remember this plan can be changed any time and that is ok - document it. Express your desires right away, let the other person tell his.
Initially see if this business relation may work. Invite him to work with you for a month or two and see if he would like it - let him know you as a boss and future partner. And what is most important ask him/her what is she bringing to the table, what is that s/he is adding that will ease your job and will require ownership of the actual business...don't go in partnerships just because many people tell you so and sounds fancy - red numbers are not that catchy.. do it because the business need to improve or grow, because you need help and you will embrace professional measurable changes. Let that potential know that...show what do you have until now, and how much has cost you to have it and run it as it is - ask him/her to provide clear ideas and probably task he may do if you decide going together...analyze everything cautiously, be humble, be open, be professional and own your things at most. You both will be accountable for everything that will happen...write that down. Have an exit strategy that later on if needed that person can go freely somehow without affecting to much the relationship...you both be mature. Have meetings, connect, study every detail together...put the relationships, work and professionalism hand to hand on the table...share ideas of interesting partnerships you have read about on the net that may help you both laugh at them but also to share and position where you wanna be and how are you gonna get there...have your life and let the other person have his/her own.