The Benefits of Starting Up With a Co-FounderBrittany Dow
Here is a short-list of benefits of having a co-founder when you start a business:
- Increase productivity. Having a co-founder involved in the day-to-day operations of the business increases productivity because workload and the various areas of responsibilities can be distributed. It is important that prior to commencement of business, you and your co-founder discuss and finalize which areas of responsibility will be managed by whom. The general rule is simply to distinguish revenue generating activities from those that focus on cost savings. If there are two founders, one should handle sales, marketing and distribution while the other oversees accounting, administration, Human Resources and IT.
- Spread the risk. Whether your co-founder is in a purely executive or co-management position, your risks in owning the business has already been reduced by an amount equivalent to the distribution of equity. Either way, there is less pressure on you to bear the possibilities of losses or failures. A co-founder can assist in generating additional funding if needed through infusion of personal capital, by securing third party financing or liquidation of assets. A co-founder can also attend to other core functions that fall outside your set of competencies.
- Gain new insights. Most likely, your co-founder will have a different set of experiences and competencies from you. You should have an open mind and allow your co-founder to share and utilize these experiences for the benefit of the business. It is always advantageous to view developments in business from the filter of another because we are often limited by our own competencies. Also, by having another perspective we are not blinded by our innate biases. In managing a business, it is easy to overlook the important details and potential mistakes because our judgment has been clouded by our own fears or when we give in to complacency.
- Improved contingencies. Most individual entrepreneurs or “solopreneurs” start out with the mindset that the world is their oyster; everything they want is in the palm of their hand. That is until reality sets in and they find themselves stuck in a quagmire of hopelessness and desperation. A cofounder improves the odds because the entrepreneur is no longer a “solopreneur” and sometimes that makes the difference between failure and success. Having a co-founder allows for feedback which opens up possibilities in times of turbulence and an extra set of skills to push the enterprise past its limitations.
- Better stress management. An entrepreneur or an owner of a start-up business already faces seemingly insurmountable odds. Statistically, less than 50% of start-ups are still in business five (5) years after operations are launched. The road to entrepreneurial success is long, hard; fraught with obstacles and can be very lonely. Having a co-founder relieves the difficulties of feeling alone. Most entrepreneurs are tied down to their businesses that they cannot even take time off for a vacation. With a co-founder, these energy building breaks are possible.
If you review the history of several successful start-ups like Microsoft and Apple, these iconic companies were founded with partners. While there are those whose partnerships ended miserably, there are those who persevered and continued to thrive in the years ahead despite facing constant challenges and difficulties. For every “Fashion Café” type partnership that languished in infamy as Naomi Campbell’s “$20 Salad” there will be a “Ben and Jerry’s Ice Cream” which rolled out several memorable ice cream flavors.
Finding a co-founder can be a tricky proposition. By default, we often think about close friends or family as prospective partners. But an established relationship is not enough to qualify a partnership. In fact, personal affinities can get in the way of sound business decision-making as our objectivities are diluted by emotional sensibilities.
The key in establishing a successful partnership is to look for a right-fit co-founder. “Right-Fit” means someone who shares similar core values and acknowledges shared purpose and vision. A partnership needs flexibility to thrive. This means, partners may often find themselves faced with decisions that require interests to be compromised. Right-fit partners will assess the situation and spare no time in making the best decision for the benefit of the enterprise.[author image=”https://pbs.twimg.com/profile_images/448855827856625665/VhBlT14c_400x400.jpeg” ]Felix Tarcomnicu works for OutsourceWorkers.com.au and helps entrepreneurs outsource work to virtual assistants. You can connect with him on Twitter. [/author]