There’s no getting around the fact that entrepreneurship is hard work. The rewards can be tremendous, but the time and effort that goes into building a company from the ground up is more than most people can handle—by themselves, anyway. To ease the burden of managing a startup, many entrepreneurs go into business with a co-founder. Splitting the responsibility takes some of the load off your back while also providing a second set of opinions and strategies that can steer your company in the right direction. However, co-founding a startup is a tricky endeavour in itself. An ill-formed partnership can have dire consequences in the future, so you want to take your time when adding another cook to the kitchen. To help you establish a healthy and productive co-founder relationship, check out the following tips.
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Decide if partnering is right for you
Partnering can be a smart path to follow, but it isn’t for everyone. While the majority of startups have two or more co-founders, plenty of entrepreneurs have made a name for themselves taking the sole proprietorship route. At the end of the day, it comes down to knowing yourself. Do you have a day job outside of your startup? Do you have a demanding family life? Do you enjoy having weekends off? If you answered yes to any of these questions—or if you could see yourself answering yes to them a year or two down the road—you probably want to seek a co-founder for your business. On the other hand, if you’re the independent type with an uncompromising vision and a desire for a full share of the equity, then sole proprietorship could be your best bet. Weigh the pros against the cons and decide for yourself whether you are personally better off buddying up or going it alone.
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Vet potential partners as you would employees
Some entrepreneurs are so eager to find a partner that they jump into a premature commitment without thinking things through. As I’m sure you can imagine, this seldom ends well. You wouldn’t hire an employee without going over their CV and vetting them in an interview, so be sure to do the same when choosing a co-founder. Go over your potential partner’s qualifications in detail and talk things over to really get a feel for one another. Do they have knowledge and experience? Do their values complement your own? Do they want to take the startup in the same direction as you? Do their strengths balance out your weaknesses? Do your homework and be sure to answer any of your potential partner’s questions as well. Ultimately, it’s not just about finding someone who’s talented—it’s about finding someone who’s talented and right for you.
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Lock it down with a co-founder agreement
Even once you’ve found someone you think would make a great co-founder, you still don’t want to rush into anything. Partnerships can easily go sour between co-founders who don’t plan for the future and put things in writing, so be sure to hash out a comprehensive co-founder agreement. This document will formalize a mutually agreeable exit strategy in case your co-founder relationship dissolves. In particular, you’re going to want to make sure you include a vesting clause, ensuring your partner will be able to walk away from the company if they so choose but they won’t be able to take 50% of the equity with them. For more information on co-founder agreements, check out this toolkit from MaRS Discovery District.
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Communicate and act as one
Once you and your partner get caught up in the chaos and excitement of managing a startup, it will become hard finding time to communicate. However, to keep things running smoothly, you’ll need to touch base regularly. If possible, set aside a few times every week to talk face-to-face so you’re both on the same page concerning the issues that affect your daily work. Moreover, even when you’re not on the same page, don’t let disagreements affect your company culture. The last thing you want is for employees to get caught up in some trivial spat and take sides between you and your partner. By presenting a unified front, you can exude the kind of harmony and cooperation that will maintain your team’s confidence in the work both they and you are doing.
Additional tips can be found in this great resource from Small Business BC. For more information on UBC’s commitment to helping local and area entrepreneurs, check out what our partners are doing at Entrepreneurship@UBC.