The number-one threat to your business isn't an external factor at all. It's the people you've co-founded that business with.
The United States is home to many of the world’s most successful startups like Airbnb and Instagram, which is not surprising since it's the leading country by the number of startups by a long shot. According to Statista, around 63,700 new companies are created every year, driving innovation and economic growth across the globe.
However, only a small percentage of startups flourish or even survive in the first five years. So, if you want to improve your company's chances of success, it's important to work alongside a co-founder with complementary skills that lead to different ideas and viewpoints, which is a boon for a new business venture.
But working with a co-founder or a startup team has risks like internal conflict, disagreement on a decision, lack of communications, and failure to formalize roles and responsibilities that can lead to disputes.
To increase your chances of having a successful relationship with a co-founder, we've created the list below that can serve as your guide.
Formalize and divide your roles.
If you don't outline people's roles and responsibilities, things can quickly go south as some may take on too many tasks, while others may end up doing redundant things (which is a waste of time and resources).
Which is why it is important to figure out-- as early as possible in the working relationship-- exactly who's in charge of which department or aspect of the business. The lack of accountability and operational inefficiencies will definitely lead to more serious problems if you don't formalize individual roles right from the beginning.
Choose someone with whom you have a “history.”
Some entrepreneurs who want to build a startup look for potential co-founders at events and founders' networks (offline and online). However, nothing beats collaborating with someone with whom you have had a history of working together – be it your college friend who helped you finish your dissertations and theses, a former office colleague with impeccable work ethics, or an ex-supervisor who, like you, has a knack for business.
Working with someone with whom you share a history makes it easier to resolve conflict and maintain open discussion. One data even showed that around 90% of successful startups were founded by teams who were former office colleagues or college classmates.
Bring onboard a third party.
Getting mentors and advisors involved can help with potential disputes and make your startup team feel more connected and accountable for their own roles and responsibilities.
In addition, your third party choice may also provide valuable advice and ideas that can give your company a more competitive edge in today's highly competitive market.
Stay focused on your shared vision.
It's not uncommon for entrepreneurs to build a startup and then develop new ideas for other projects down the road, which could put pressure on the partnership because of the additional responsibilities and objectives. That being said, co-founders and their startup teams must stay focused on their shared vision and values.
If mutual respect, innovations, and open discussions are shared values in your company, you can weather any storm together.
Create a co-founder agreement.
This agreement, which stipulates ownership, roles, responsibilities, departures, etc., serves as a set of checks and balances and a contingency plan should the relationship go south. Think of it as a prenuptial agreement – but in the business setting.
You might be tempted to copy-paste the first co-founder agreement you can find on the internet. However, it's best to invest time in creating your own agreement, which means you need to look at your unique circumstances. You can also check out multiple templates so you won't miss anything important.
Watch the video to learn more.
A Final Word on Working with Co-Founders
Trust and respect are essential for any healthy relationship, especially in business when internal conflicts and disagreements arise on a regular basis. Once you have these shared values, it's easier to navigate the challenges with your co-founder, allowing both of you to develop resilience and new skills that can help you in future projects.
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