|TALENT POWER PARTNERS||
|TALENT POWER PARTNERS||
Co-founding a company by two or more co-founders is like getting married; the early days are the honeymoon period. During those first, exciting days of startup bliss, you may not think it’s necessary to sit down with your co-founder to hash out possible potential concerns.
But it is important.
Right from the beginning, it is essential for the co-founders to align their visions and ensure that they are in sync in what they hope to achieve.
Talking through the issues and documenting the agreements can help avoid disputes,lawsuits, and possibly the unwanted dissolution of your start-up. A start-up is a living entity which changes everyday, so this will be more of a working document than a binding contract, but it will still serve as a good starting point. It will represent a shared foundation for your business that you can refer back to in days ahead when your goals may get cloudy and convoluted and your partnership may be tested.
I. Goals and vision. This is the nitty gritty of your company make-up. The big questions. Why are you creating this startup? What need will it fill? What will your initial product/service offering be? And what is your strategy for growing the company? But your goals and vision go beyond your starting position. How will you handle events down the road that will impact your company such as acquisition, taking on new partners, and/or going public?
II. Company values and philosophy. Your company success will depend on vision alignment. Alignment between you and your investors, your employees, and your customers. But this alignment starts, first and foremost, with you and your co-founder. You should share the same priorities and agree on what’s most important to you both personally and for the future of your company.
III. Measurement of success. This question is often overlooked, but really gets at the heart of your business. What do you and your co-founder hope to get out of this business? How will you know if you’ve achieved your goals? For one founder, success may be measured qualitatively in terms of revenue earned, while for another it may be in global reach and influence. If you’re not shooting for the same target, how can you agree when you get there?
IV. Founder roles. Work out the division of labor for the co-founders. What will be your specific responsibilities and what will be under their charge ? Add a provision specifying what action you will take in the case that a founder who is not adequately managing their individual responsibilities.
V. Decision-making process. Since it’s impossible to think through every aspect of the business from day one, it would be unrealistic to expect to make every important decision from the outset. Hence it is very important to have a decision-making process in place. The co-founders need to agree on how decisions will be made and who will be in charge of making which kinds of decisions. What steps will they take if they don’t agree on a decision.
VI. Equity and ownership. This is often the most common cause of conflict amongst co-founders so it warrants a serious discussion. Each co-founder needs to negotiate their way to an equity split that feels right for them based on their individual role, responsibilities, and contributions.
VII. Target audience and market. Assuming yo ou and your co-founders are clear on your product and/or service offering, but that’s only part of the equation. Once you know what you’re selling, you need to be clear on who you are selling to and how you are going to reach this audience.
VIII. Thoughts on exit. It may seem odd to start a business thinking about its end, but not for entrepreneurs. What is the exit plan if a founder leaves the company either voluntarily or not? It is a good exercise to think through every potential scenario.
Discussing these issues with your co-founder could get uncomfortable, may create rifts, or uncover some deal-breakers. It would be preferable to find that out sooner than somewhere down the road. If you can successfully have these difficult conversations, it is a testament to your partnership and to the strength of your alliance and will serve as a solid foundation from which to grow your business.