5 THINGS TO DISCUSS WITH YOUR CO-FOUNDER BEFORE STARTING A BUSINESS
Co-founding a business, sometimes called partnership, is setting up a business entity or enterprise with one or more persons. It’s a familiar concept as co-founders started numerous Nigeria startups.
“Two heads are better than one” is one of the catchphrases that make business-oriented persons want to get involved in co-founding a business.
Why co-found your business?
While running a partnership business is challenging, there are several benefits to gain if you decide to co-found a business.
Some of the reasons why you should co-found your business include;
Starting a business alone could be hard, and you’re faced with the challenges of being alone and isolated. Working with a co-founder will help you have a partner which you can be in mutual accountability with. This reduces loneliness and increases productivity.
As a lone business person, you may lack enough resources to run your startup. However, with more founders comes more resources and expansion. This increases the survival of your business and boosts your human capital.
Working with a co-founder will increase your workforce as your co-founder will bring his/her view into the scenario. You’ll have two or more of everything; multiple opinions, multiple perspectives, and multiple sets of hands to work with. This gives you diversified inputs which you can choose the best from.
As a solo founder, you’re labored with so many things to do. From product development to market research and marketing; you can’t do them all alone. A co-founder will help lessen your burden by bringing in a much-needed division of labour.
Your co-founder will tell you the truth you aren’t seeing or unwilling to accept. They hold you accountable for your decisions – something you might overlook as a solo-entrepreneur.
Pitfalls of Co-founding a business
Though co-founding a company has its advantages, it has disadvantages too.
Some of these limitations of co-founding a business include;
Different standards and ideals
Your co-founder can be a liability to the business, especially when his personal or business standards and models don’t correlate with yours. It is like walking the business in two opposite directions, and this can hinder business growth.
An issue of trust in business is a significant reason businesses break up. Your co-founder is someone you have to trust. You have to know as much as your co-founder knows. When distrust sets in, business starts crumbling.
Clash of interest(s)
Launching a startup with a co-founder is like getting married. You don’t have the liberty to singlehandedly make decisions in business. Sometimes, your co-founder’s opinion could differ from yours, and you may be forced to reach a consensus or risk a break-up.
You don’t get to take it all
Unlike a solo-entrepreneur situation, you get to split whatever returns you make in business with your co-founder. In other words, co-founding demand equity.
5 Things you should discuss with your co-founder before starting that business
To help you to cope with your co-founder, let’s evaluate some things you must put in place to avoid friction and business failure because of your partnership.
Define Your Roles and Responsibilities
Figure out what there is to do and who does it. Be sure you assign roles to cover all areas to avoid loopholes. There should be an explicit agreement on the functions and responsibilities of co-founders. Each person should work according to his/her competencies.
Agree on Resources Distribution
Decide who is contributing to what and when. Is everyone working for the same number of hours? How much does each founder invest in the business? What is the profit-sharing ratio? Make sure your co-founder understands these and agrees with you on the terms.
Discuss Exit Strategy
Agree from the start of the business on what the long-term goal of the business is. How long does your co-founder intend to stay in business? Is it a lifetime commitment? What is the way out if the company moves towards liquidation?
Discuss a business legal framework
Do a formal and explicit agreement that outlines the terms and condition of operating the business and also get your co-founder to sign a founders’ agreement.
Develop a backup plan
Many startups end where they started. What happens in case this business fails? Discuss this with your co-founder and make plans for alternative(s).
Conclusively, when you agree with your co-founder, defined your roles and work together, your startup is sure to grow into an industry authority.