What is a co-founder? What aspect should you consider before taking on a co-founder? Simply put a co-founder is somebody who has started a company with the help of at least one other person, essentially making them joint owners of the company. There are numerous considerations before taking on a co-founder. One of the hardest things you can do in your lifetime is to build a successful business. The life of an entrepreneur is filled with unique challenges that are almost universal. Co-founders come in all forms and dynamics. For every Woz there is a Jobs and every Marks has a co-founder in Spencer.
An entrepreneur has to be dynamic, multi-tasking, driven and maybe even a little crazy. One has to look at everything from operations, finances, HR, marketing and everything in between. Needless to say a 24-hour day can become very small in the life of an entrepreneur. This is when you might consider either splitting your operations with someone who shares your vision, or perhaps your work ethic, or something else entirely. This person is your co-founder. If you have decided to trust someone with your business, you need to look out for the following in a co-founder
If you sought a formal definition of a co-founder then you may have a look here.
1. Evaluate why you are taking on a co-founder in the first place
This would be the first thing you do to increase the chances of long-term success. A co-founder would ideally supplement your own skill-set with capabilities that were previously absent, or not developed well enough.
The fear of being a ‘One-man team’ is that one can become blindsided facing the challenges thrown at you. This may cause you to lose sight of the long term goal or even miss important shifts in the market environment. As a result, you could fail to adapt your product or services accordingly or just wallow in non-stop stress. Which, in turn, could result in the slowing of sales or slowly losing steam as a company altogether.
Another, often less focused, reason for taking on a co-founder is their social and professional network. A co-founder, when they join your ranks, will bring along contacts that in turn will become your contacts by extension. This single aspect may help your company become the trailblazer you so dearly wish it to be. Effective use of networking can yield significant leads and collaborations that may save you cost or help gain business process efficiencies.
The sheer diversity of tasks that a co-founder may need to carry out is gargantuan because not only do they take on the entire responsibility/headache that comes with being an entrepreneur, they are also dividing these tasks with another human in parallel, which adds team-building to the fold. How do you divide tasks with a co-founder? Well, that depends entirely on the task.
1.1 Creation of Business Plans
If you are starting from scratch then you might want to consider which of you is the most adept at creating a business plan that will be at the very core of how this business will run. As they are a window into the vision of the co-founders for the company, business plans need handling with utmost precision. Document handling may also include financial projections, legal documents pertaining to the formation and registration of the company. They also include the division of responsibilities of co-founders. The co-founder, would ideally, be working with an expert legal team to ensure all the paperwork fulfill the necessary requirements.
1.2 Product Development
The main difference between a CTO and CEO is which one of them works directly on the product. If a co-founder is tasked with the leading the development of the product they will have to deal with the planning and execution of the said tasks. A well-developed product, whether digital or physical, would require a lot of attention to detail and emotional investment. A co-founder that is wedded to the vision, the big picture, is well placed to make this happen. It will include the basic layout, the pooling of resource, the identification of process efficiencies, cost-saving measures and quality assurance. A combination of all the above would lead to an ultimately viable product based on your target market.
1.3 Team Development
Some co-founders, especially those with background knowledge of human resource (HR), may be tasked to hire or manage the HR affairs. This would require a record of individuals interviewed, hired and let go. If yours is a forward-thinking band of co-founders then you would also have developed personal development plans for your staff. Including training schedules, appraisals and annual reviews for the team.
1.4 Financial Planning
Co-founders, one’s with experience in finance are generally charged with the financial planning for the company. They are expected to develop financial plans to estimate the cost of bringing their product to target markets. These will include definitive timelines and may also determine break-even points. Timelines then help form the financial milestones for the team to aspire to and ensure long-term solvency and set budgets as the company grows. These financial projections can also help the company if and when the company is in need to inject funding and investors for a new venture.
1.5 Marketing and Product Placement
Like all young businesses, your business will need a marketing campaign. That job falls, inadvertently, to you and your co-founders. In addition to developing a product, a co-founder will be conducting marketing and promotion for your product in the early stages. In order to give a product a fighting chance in the ever-competitive market; co-founders need to build anticipation for their products. To that end, co-founders need to attend industry events to network and ensure that there is demand – once the product development stage ends and moves into actual production. In addition to traditional methods of marketing, in view of the current business climate, you should also build your company’s’ social media presence.
However, keep in mind, anyone exhibiting the following traits needs to be avoided like the plague as they will drag the business down with you.
2. Don’ts of taking on a co-founder
Just like when looking for a co-founder you must ensure a certain set of traits – you must also know what type of individuals you want to avoid. The relation with your co-founder(s) is akin to being in a marriage. Not only do they have to work with you they also have to put up with you, as a person. The opposite applies to you, too.
2.1 Only in-it for the title
It is as simple as it says on the packing. The sole reason such individuals have become a part of a startup ecosystem is so that they can wear the badge of a founder. In today’s business world, being associated with a startup has become a somewhat classist thing. It does not matter, to some, if they contribute anything of note to the company or product. Heck, some even join to have an early exit or use the story of a failed startup just to get the attention of some venture capitalist (VC) or gain an investment.
Just like some namesake founders there are individuals who are here to ride the tide. To enjoy the glory of a successful venture. They may have seen the success of a concept and decided to dive in, headfirst, to seize the momentum. Most such individuals are not even deeply passionate about their product or, at worse, the industry they’ve jumped in. All budding businesses are susceptible to rough patches of contrasting levels. However, in case of such an event, this may result in their commitment fizzling out sooner than gas leaves a carbonated tin-can upon pulling the lid. Life long investment, then, is utterly out of question. If you end up taking on a co-founder of this ilk, it is best to pull away as soon as you can or else when the going gets tough you will be left to pick the pieces.
2.3 Quick mint/ Money grabs
These are the worst co-founders that you may bring on-board. The ‘founders’ and the ‘opportunists’ are, maybe, in for the glory and the intangibles but the money-grabs are in it for the sole purpose of making a quick buck. Such individuals target ideas and startups that they see the most potential in or near IPO. They want to maximise their returns in the minimum amount of time with little or no effort. Profiteering is not wrong, let me make this clear. But individuals with no emotional investment or significant contribution to the success of a product are not the right fit. If we needed a quick push towards success – we already have venture capitalists for that. Loads of them.
3. Dos of taking on a co-founder
It’s all good and dandy. You’ve picked a co-founder that you match perfectly – but you need to ensure you take some important steps. In this regard it is best that you do the following:
3.1 Divide Roles and Responsibilities
It is best to have clarity on who will play what role and in what capacity. The sooner you divide the roles and identify the responsibilities, the better. In short, figure out who’s got what weapon to yield and what front are they to defend before going to war. You must make sure you cover all aspects of business in this divide, though.
3.2 Who brings what to the table?
Once there is a consensus on the aforementioned it is paramount to look into what recourse is brought in by who. The investment of money and allocation of time to the business efforts have to be quantified and agreed upon. If a co-founder can only invest a set amount of hours per week you have to consider and agree on how to offset that against the expected outputs. Consequently, if a co-founder can bring in resources that could affect the business in a big way; that needs to be equated, too. If you happen to have a predetermined set of resources or an expectation of work hours you must communicate them to your co-founder(s). The idea is to agree on a level of commitment each co-founder can deliver. The key is to gear for success and not a failure.
3.3 Sign on the dotted line
Just like being in a wedding (carrying the theme of partnership), you must sign a prenuptial agreement. This piece of document would be called the ‘Founder’s Agreement’. It lays bare the roles and responsibilities, terms and conditions – explicitly – for all parties involved. The content of such an agreement will, ideally, include the share of equity, the ownership of IP, decision making power. The most important clause, however, is the formula that you would agree with your co-founder(s) to break up the partnership. It has to ensure that any split in partnership does not derail the product or company itself.
3.4 Agree on an Exit Plan
An agreement on the exit plan is quite significant in the same way it is when you select a co-founder. You and your co-founder(s) have to be on the same page in terms of where do you see your exit from the venture. Is it going to be in three (3) to five (5) years or will it be a life long commitment? Of course, an exit plan can change down the line but it is paramount that there is a consensus among those around the table.
4. How to find a co-founder
With all the above in mind, we can set about solving your co-founder issue. The best way to solve this problem is by deconstructing it. It is paramount that you take great care in zeroing onto your co-founder. It is essential that your work ethic and value systems match and your priorities align. If you wish, do take a look over here to figure out some simple but important steps in finding an ideal co-founder for your business.
In 2019, finding entrepreneurs is by no means limited to choosing partners from your own direct network or immediate social circle. You can now take on a co-founder through a variety of means, even online. There are now a number of co-founder matching websites that work on similar principles as matrimony sites. You can consider taking on co-founders based on your preference of experience, qualification, past experience, vision, and passion. Why not try your luck, when taking on a co-founder by matchmaking at TechCofounder, Founder2be, Cofounderslab, FounderDating, FoundersNation. Despite there being multiple avenues and platforms for finding co-founders, the necessity remains the same. You must match up with the right individual(s) in order to increase the probability of success of your startup. All the best.
You might also like
More from Analysis
The phrase subliminal messages or, subliminal stimuli, is not usually uttered in civilized company as it lets in a waft …