Picking the right Co-Founder...hmmmm
Updated: Sep 23, 2021
Work everywhere, filling my inbox, paper bags on the floor, and piling up to the ceiling of my mind. If only the business account were filling up the same way, overflowing would be super special. Is it time for a Co-Founder? Believe me when I say I considered it, pitched it, and created a memorandum exception to solicit help. Ultimately, our total addressable market made me nervous and cautious about inviting someone into my 90-hour workweek.
A Solo-run company can certainly prove successful if it's run correctly. If the company outsizes your skills, find at least one partner to help bring your early-stage company to scale. It is also a proven tactic to attract venture capitalists and hopefully help you keep your sanity.
Of course, no two partners are created equal. Here's what you should look for in your co-founders and the legal and structural considerations you need to make.
Why Do You Need Co-Founders?
Co-founders bring a host of benefits to the table. If it takes a village to raise a child, it takes a team to scale a startup--and venture capitalists know it. Aside from making your company more appealing to venture capitalists, though, co-founders also present these advantages.
Yellow is thought to stimulate the nerves and purify the body. For those of you that are a bit OCD, and cringe at the idea of letting go of control like I do, breath...
Cover Your Weaknesses - Ideally, the partner you choose will perfectly complement your skillset. Where you fall short or lack expertise, your partner should be capable and strong. In the best partnerships, the individuals fit together like puzzle pieces, helping to close gaps in skills and knowledge.
Split Your Workload - Everyone underestimates just how much time they'll spend building their early-stage company. Having the right partner by your side can help minimize your workload by allowing you to delegate the essential tasks your startup needs.
Gain Different Perspectives - Aside from bringing different skills to the table, a partner also brings a new perspective, which can prove highly beneficial as you expand and scale your startup. A partner's perspective can help bring realism to optimism or help you see opportunities you wouldn't consider on your own.
Take Advantage of Personal Funding - Every founder puts much of their time and money into the growth of an early-stage company. When you add co-founders, you're able to multiply that initial investment so long as you find a partner who's just as motivated as you are. Partners get the startup off the ground more quickly and sustain the business through early challenges.
The Legal Process of Adding Partners
If you're a solo founder, you have a lot of flexibility with starting and operating your business—primarily because there's very little accountability. When you're running all on your own, you can call the shots with no judgment or input from any equal, but that isn't necessarily a benefit.
Partners can speed up growth, and they help divide work duties, expenses, and liability equally amongst parties. With that said, there are additional legal considerations you must consider when adding partners to your business.
How Do Partners Alter Company Structure?
Suppose you're a solo founder who's been operating with no official state filing so far. In that case, that means you're a sole proprietorship. Sole proprietorships are personally and directly responsible for all tax, debt, and liability that could befall their business--there's no legal separation between individual and startup.
Whether you add a partner or not, you should explore company structures that will help shield you from liability and possibly save you money come tax time. With a partner in tow, your options are slightly different, and additional steps are necessary for a business filing. You can expect to draw up an organizational chart, appoint directors, write bylaws, draft a shareholders' agreement and hold regular meetings to comply with state laws.
Maintaining Accountability in Your Organization
Accountability is an essential part of building a successful company, even more so when you begin bringing partners on board. Since one of the primary advantages of getting partners in is sharing responsibilities, accountability is critical in making sure those responsibilities are taken care of promptly.
Ensuring accountability in your organization begins with yourself—you must be in the habit of setting boundaries, working diligently, and communicating with those around you when you need help or more time. The next step is choosing a partner who can do the same, often easier said than done. Knowing how accountable an individual is to their work begins with working with them.
Typically, the most accountable individuals in business are those with "skin in the game." This means you should seek out a partner who is prepared to buy into your company with their heart and soul, putting money on the table to do it. For instance, if the partner expects to have a 50/50 share, they should ideally put down as much money as you have upon entering the partnership.
While putting money on the table isn't a sole indicator of accountability, making sure you choose a partner who will invest in the business is a good start. Only those who believe in the company and its mission will be there when you need them.