Did you know that one of the top reasons for early startup failure is the inability of the co-founders to get along?
Considering the amount of time that a start-up requires, and the many demands and stressors, it’s not particularly surprising. That’s why choosing the right person is almost as important as choosing the right spouse. It’s also why a lot of people give serious consideration to going it alone. Let’s take a look at both the idea of going solo and what to look for in a start-up partner.
It may be tempting to go it alone to realize your start-up dream, but statistics advise otherwise. As hard as it may be to find the right partner, a report from startup investment fund First Round says that solo entrepreneurs get 25% lower valuations from investors, largely because having just one person carry the weight means greater risk. Moreover, when it comes to success in startup ventures, co-founder teams outperform solo founders by 163%. Studies show that the most successful startups have two co-founders.
As confident as you may feel in your own ability to manage on your own, the general consensus is that startups represent too much work for one person. On top of the workload, there are countless advantages to having a cofounder. Having another equally dedicated person to bounce ideas off of results in better brainstorming – plus it’s invaluable to have someone you can count on to provide motivation and emotional support, and to be accountable to.
So, how do you find the right person?
Finding the right partner for starting a business involves many of the same steps as finding a spouse. You want to make sure that the person shares your same values and expectations. Many people look to former colleagues or school friends whose work ethic, skills, and goals they are already familiar with, but just as is true with looking for a life partner, if you don’t know somebody then you may want to ask family and friends to refer you to someone they think would be a good match.
Another good way to find a likely co-founder is to attend business events and other activities that those interested in startups might attend. You might even consider attending some business school or marketing classes to find like-minded people. Just make sure that once you identify a good candidate, you don’t jump in too fast. Again, as is true when finding a mate, going too fast may lead to disaster in the long run. Take the time to truly get to know somebody and how they operate before you jump into a long-term partnership. Discuss what your expectations are of each other and of yourselves. How much time do you plan to invest in the project? How big and how quickly do you want the business to grow? What is your vision for the future? How long do you both plan to stay involved?
The more you know about each other before you get started, the more certain you will be that the individual is right – or wrong – for your project.
You also want to make sure that rather than having the exact same skills, you have skills that complement each other in support of the business. Just as in a marriage you may want the “planner” and the “doer,” you want to make sure that your co-founder brings skills that you don’t possess – and that you need – to the startup.
One of you has to have marketing skills and the other technical skills, or one of you has to be able to communicate to employees and/or investors while the other is behind the scenes, drawing up plans. Perhaps most important of all, at least one of you has to have the ability to recognize when you are both in over your head and need some outside help. If you’re both too self-confident (or stubborn) to acknowledge that, then you’re going to end up in trouble.
Alternatively, if you both possess the same types of skills, you both need to acknowledge that your dual strengths leave you with vulnerabilities that will need to be filled by somebody else, or by investment in tools, consultants, and employees who can bring in the skills that you lack.
Building a startup can be incredibly exciting, but it is also high risk. Taking the time to find the right partner is one of the smartest investments you can make in your success.
About Frank Jenkins Jr
Frank Jenkins Jr. CPA is the managing partner of Adams, Jenkins & Cheatham, a CPA practice based in Midlothian, VA. Frank specializes in Consulting services, tax planning, audit & assurances. "I genuinely care about our clients because I have a personal connection with them." He is active in the community and belongs to the AICPA and the VSCPA.
