Did you know that over half a million new businesses open across the country each month? However, only two-thirds of them survive longer than two years. A lack of focus or motivation, bad partnerships, poor marketing and financial issues are all common reasons for startup failure. One way to mitigate these risks is to find a cofounder who shares your passion and can bring value to the table.
TL;DR (Too Long; Didn't Read)
There is no such thing as a perfect co-founder, but you can find someone who complements your strengths and weaknesses, shares your vision and has similar goals. Look for a potential partner who believes in your business idea and is willing to put in the time and effort to bring it to life.
Do You Need a Co-Founder?
Some of the most popular brands worldwide had two or more founders. Warner Bros., for instance, was created by Jack, Sam and Harry Warner in 1923. Hewlett Packard was started in a small garage in California by Bill Hewlett and Dave Packard, and Microsoft was the brainchild of Bill Gates and Paul Allen.
Google, Apple, Twitter and McDonald's are all examples of successful business partnership endeavors. Although not all partnerships stood the test of time, they played a key role in brand development and business growth.
While it's true that you can start and run a company alone, having a business partner makes everything a lot easier. Being a startup founder is challenging, as there will be moments when you feel angry, lonely or hopeless and ready to give up. With the right business partner, you won't have to face these challenges alone. He can help you find solutions, keep you accountable and share valuable insights.
A co-founder is the only person who will understand your business and its intricacies. Together, you can identify problems and brainstorm solutions, and he can give you a fresh perspective and help you keep your calm when times get tough. Plus, you can split the expenses associated with starting and running a business, exchange ideas and leverage each other's skills and experience.
Furthermore, having a business partner could make your startup more appealing to investors and help you secure financing more easily.
The Marriage Metaphor
A business partnership isn't too different from a marriage. Sometimes, finding the perfect co-founder is just as difficult as finding a marital partner. Building and maintaining this relationship isn't easy either since it requires mutual understanding, trust and transparency. Just because someone looks like a perfect match on paper doesn't mean your relationship will last.
Marriage is often idealized, and so are business partnerships. Like it or not, there will be conflicts, arguments and disagreements between you and a potential partner. That's why it's important to find a co-founder who not only complements your skills but also shares the vision of your startup and is willing to do whatever it takes to bring it to life. A startup co-founder should also share your values, priorities and work ethic.
Think of this person as someone with whom you're in a full-time relationship. You will spend hours working together each day, share your best and worst experiences, support each other and make sacrifices along the way.
A perfect co-founder will help you consider ideas, expand your horizons and take things off your plate when you're feeling overwhelmed. However, you need to be willing to do the same for her to make things work.
Working With Family or Friends
It's not uncommon for entrepreneurs to join forces with friends or family members when starting a venture, but is it really a good idea? It depends.
The common recommendation for startup founders is to team up with a tech co-founder, but this isn't a must. If you have a friend or relative with a technical background, try to dig deeper and see whether he shares your passion and commitment. Consider your personalities as well as your strengths and weaknesses. Since you know your friend better than anyone else, you're the only one who can decide whether or not he's a good fit.
If you choose this path, put your partnership in writing; make sure you're on the same page with your friend and know who is responsible for what. Before getting started, talk through what would happen if one of you receives a job offer, gets married or decides to move to a different city or state. Discuss your business goals in the short and long term, decide who owns what and put together the agreements you need.
Ask yourself the following questions:
- What will happen when you disagree on something?
- How will you keep your professional and personal lives separate?
- How will you assess your friend's work performance and results?
- What will you do if things don't work out? Do you have a backup plan?
- What roles and responsibilities will you have? What about your friend?
- How does each of you feel about taking risks?
- Will you offer your friend or relative an equity interest in the business?
- What is he bringing to the table?
- Are you in this for the same reasons?
- Are you planning to get outside advisers involved?
Consider the Potential Pitfalls
Joining forces with a friend or relative isn't all sunshine and rainbows. In certain circumstances, this kind of relationship could turn against you. If something goes wrong, you may end up arguing with the same person with whom you share your home or with whom you eat dinner every day. You may also find yourselves working overtime and ignoring the things that brought you together in the first place.
When you team up with a friend, workplace conflicts may carry over to your personal life and vice-versa. Even if you get along, things may become too comfortable, which could hamper business growth. Furthermore, you may find it difficult to give honest feedback and make important decisions that may affect your friend or relative.
Make things clear from the start, respect your partner and know how to communicate a different opinion. Choose a potential partner for what you have in common as well as for the differences between you, not just because you're friends or relatives. A friend may support your opinions and share similar values as you, but this doesn't mean she's a good fit for your startup. Someone with a different background and different interests may offer a new perspective and bring new skill sets to the table.
Not All Business Partnerships Last
Many world-famous brands were developed by two or more entrepreneurs sharing the same vision and goals. However, their partnerships went down in flames at some point.
A good example is Facebook, the brainchild of Mark Zuckerberg and Eduardo Saverin. The two started the company together, but Zuckerberg eventually reduced Saverin's shares in the business, saying that he wasn't committed enough.
About half of business partnerships fail within two or three years; some sources say that this number is actually closer to 80%. Sometimes, it happens when the founders have hidden agendas. Other times, they communicate poorly, argue about money or have conflicting values. Furthermore, partners with similar skill sets are more likely to argue because of differences of opinion.
Why Business Partnerships Fail
A lack of commitment or transparency as well as different motivations and ego clashes are all potential issues that may affect a partnership. Even if your partner seems like a perfect match, he may change his priorities later.
The truth is that there's no way to completely eliminate the risks associated with having a business partner. That's why you need to put everything in writing and have an exit strategy.
Business partnerships may also fail because of unequal commitment among the parties involved. Let's say you have a great business idea, find the perfect co-founder and start a company together. Initially, you agree to a 50/50 ownership, but soon you realize that your partner is rarely present. In this case, you have two options: discuss it with your partner and give him a second or third chance while you keep losing money or dissolve the partnership.
How to Find a Co-Founder
Finding the perfect co-founder is both an art and a science. It also takes a little bit of luck. Sometimes, you can spot the right person in unexpected places, such as a Facebook group or a cafe. Other times, it can take months or years to find the person for whom you're looking.
Your professional network is a good place to start. Think about former or current colleagues or even clients who might be interested in your business idea.
Attend workshops, industry conferences and business events and visit entrepreneur forums and chat boards where you may find potential partners – just make sure you have a clear idea of what you're looking for. You may also contact your former university teachers and ask if they could spread the word about your venture.
Leverage Online Networking
Another option is to join online "matchmaking" platforms for entrepreneurs and startup founders. Create a detailed profile, describe your business idea and connect with potential candidates.
CoFoundersLab, for instance, uses artificial intelligence to match users with potential business partners or team members. The platform features over 400,000 entrepreneurs in more than 140 countries. Founders Nation, on the other hand, allows users to search for co-founders by location, skills, professional background and other criteria.
Other similar platforms include FounderDating, Founder2be, YouNoodle and AngelList. The latter is actually a job board, but it gives users the option to search for co-founders. Likewise, you may write as a job listing what you're looking for in a potential partner and post it on LinkedIn, Indeed, Glassdoor or CareerBuilder. You may use social media and online platforms like Meetup to connect with like-minded entrepreneurs and find a co-founder for your startup.
What Makes a Perfect Co-Founder?
You need to determine what you expect from a co-founder just like you'd do when hiring someone. Ideally, look for someone with complementary strengths and skill sets. For example, if you have a brilliant idea for a mobile app but lack programming skills, consider joining forces with a tech co-founder. Search for entrepreneurs with a background in coding, IT engineering or software development.
When looking for a partner, consider her risk tolerance, values, work ethic and vision. Also, try to figure out how she handles conflict by asking situational questions like those used for job interviews. Another aspect to consider is her thirst for knowledge; you don't want to team up with someone who claims to know everything but rather someone who admits that she has a lot more to learn. Take these factors into consideration as well:
- Shared passion
- Emotional stability
- Complementary skills and weaknesses
- Leadership skills
- Complementary temperament
- Financial behavior
- Mental and physical energy
- Professional experience
Try to find a co-founder with a personality you like. If you don't feel comfortable around her, all the great skills she possesses won't be enough for your partnership to work in the long run. Although there is no such thing as a perfect co-founder, you can find someone who will grow with you, share your expectations and be there when times are tough.
- Investopedia: How Many Startups Fail and Why?
- Brandon Gaille: 8 Famous Business Partners and Their Stories
- Business Insider: 10 Insanely Successful Co-Founders and Why Their Partnerships Worked
- Entrepreneur: 3 Unparalleled Benefits of Starting a Business With Friends and Family
- Real Leaders: Eduardo Saverin, Facebook Cofounder
- LinkedIn: 18 Reasons Why as Many as 50% of Business Partnerships Fail Within the First 2-3 Years
- NorthOne: 5 Reasons Why Business Partnerships Fail
- Alvernia University: Types of Partnerships in Business