October 2, 2015
Do you have an idea or solution to a problem faced by millions of people? At the core of every entrepreneur is a problem solver. While the challenges may be great, the rewards for starting your own successful business can be even greater. To achieve the greatness inside all of us, many entrepreneurs find they need a partner: someone that compliments their skillset and can provide support during the rough patches. Let’s look at a few of the most important considerations when selecting your co-founder.
Equity vs. Salary vs. Both
When you look at bringing on a partner, do you have enough capital to support them? if not, can you live with giving up part of your business in order to compensate them? The most highly qualified candidates may even demand both!
The Value of Equity
While giving someone else a percentage of your idea may not seem like an expensive proposition, remember that the value of your company could be in the millions one day. Ten percent of a million is $100,000. Giving equity may be cheap now, but it’s incredibly expensive once your company grows. Plus, depending on the amount of equity given out, you may be giving away control of your company.
What’s an Entrepreneur?
The answer to this question depends on who you ask. There’s an old saying: “What do you call the unemployed child of a wealthy family? An entrepreneur!” While this may certainly be true for the 1%, the rest of us have to look at ways to create value with our companies. Everything a founder does will either add or subtract value from their brand.
Bringing on a partner is one of the most important decisions your startup will face.
Fill in the Gaps in Skillsets
What do you and your team (if you have one) count as your skills. What are your weaknesses. After identifying your weaknesses, you should use that list to judge your potential co-founders. You need to find the partner that plugs the gaps in your skillset, while counterbalancing your weaknesses.
Communication and Track-Record
Opposites don’t always attract. Hiring someone that is able to fill in the gaps in your existing team may mean you’re hiring someone with a very different perspective on things. This can cause some serious bumps on the road towards success. This is where communication becomes absolutely critical.
Pay close attention during the interview to see how the candidate communicates with you. Are they open, sincere and able to communicate their ideas effectively? These are great signs that this person will be able to work with you through the difficult times by letter you know where they stand.
Starting any business requires financial sacrifice. Is your potential co-founder in a position to survive the lean months? Do they have personal savings? What does their credit report look like? Putting the financials in order is an important step. A credit report of every co-founder will be used when a bank assesses your company for a loan or line of credit. This may be a time to discuss how an IVA works, and how it could help resolve outstanding financial issues for any of the founders in your company. Thankfully there are companies that can offer debt restructuring solutions that minimize interest payments and provide a fixed repayment period.
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