As most founders know, or come to learn, finding the right business partner or co-founder is among the most important–and difficult–things we do as entrepreneurs. In 2003 I came up with a killer idea for a new RFID product. I talked about it with a great friend of mine who was also interested in starting a business, and we decided that we’d find a third co-founder who would have the engineering skills to complement our business, marketing, and programming skills. We put the business plan together, developed the brand, got the product details down on paper, and began looking for a third business partner with electrical engineering experience. We looked, and looked, and looked…
Our search for our third partner lasted about 9 months. *We never found the engineer we needed* to get the business going. Throughout the process, I kept asking myself why there wasn’t a way to find business partners online, so I came up with an idea for one, and I founded “PartnerUp”:http://www.partnerup.com/. PartnerUp serves as a network where entrepreneurs can find the business partners, co-founders, board members, executives, advisors, and professionals they need to start and/or run their business.
Through all of my experiences, good and bad, and hundreds of other entrepreneurs that we’ve talked to during development of the PartnerUp site, I’ve learned a lot about finding the right business partner. Below are some *tips for what to think about when looking for your cofounder.* Hopefully, they make the process a little easier for you.
*#1 Know what you need*
So, you’ve decided that you need a business partner. Now what? Well, the first and most important step is knowing exactly what skills and experience you need to make your business a success. I’d first make a brief list of the skills and experience (think sales, engineering, marketing, operations, business development, etc.) that you will need in order to make your business idea a success.
Then, from that list, make a list of the things that you can bring to the table on your own, and be honest with yourself about what roles you’ll be able to do, and what skills and experience you just don’t have. It might be fun to learn how to do marketing, but don’t learn on a viable business venture. You might just make it unviable. After you cross off the items on your list that you have the skills and experience to handle yourself, the items that are left on the list are the things you really need to look for in a business partner. Now that you know what you need, stick to it. The best partnerships work because each partner has something different to bring to the table and can do things that you can’t do on your own.
*#2 Look in the right places*
Now that you know what you need and what to look for, there are a lot of places that you can try looking for a business partner/co-founder. When I was starting my RFID venture, I pretty much tried them all. I went to every local networking event that I could find. I started talking with old friends and seeing where they were at and if they knew anyone who fit the bill for what I was looking for. I placed a few ads on job sites. And, I found zero leads.
In retrospect, I could have saved myself a lot of time and effort by targeting my efforts on some specific areas. First, of course, I think you should try “PartnerUp”:http://www.partnerup.com/, since the reason that we created it was to help people find business partners/co-founders. When I was trying to find a partner, there wasn’t a service like PartnerUp available, so now that there is, why not use it?
At the same time, now that you’ve already figured out what skills and experience you need, you should be able to start targeting people that fit the bill. If you’re looking for an electrical engineer, find out what local trade associations and networking events exist for electrical engineers and go to those events. Then, try calling some professors at your local university and seeing if they know of any entrepreneurial students, alums, or professors who might be interested in your idea. Finally, don’t forget about existing contacts that you have who could potentially know someone who has the skills and experience that you’re looking for.
*#3 Be picky.*
Get to know potential partners before taking the plunge. During your search for the right business partner for your business you will most likely meet many intelligent, great business people. Will they all be right for you and your business? Absolutely not.
The smartest thing you can do for yourself and the success of your business is to be picky about the people you choose to bring in as your partners. Interview them, ask them every question you can think of, make lists of what you want the person to contribute, and don’t let emotions get the best of you. Just because the person may have been your best friend for 10 years, does not mean they will be the best fit for your business, and if you bring them on just because they have been your best friend, you will likely both be disappointed in the outcome.
Make sure you know exactly what skills you need the person to have, what personality traits you can and can’t work with, and dig for answers to those types of questions before you take the plunge into business. And most importantly, pick someone that is as excited and as driven as you are to make this business idea a success. Choosing the wrong person can lead to a lot of time, money, and resources lost and ultimately to the failure of your business idea.
Finally, get to know potential partners before you dive in. Meet them for coffee, meet them for dinner, sit down and talk about potential issues and the business, put together a rough business plan with them, talk about how you would run the company. You probably wouldn’t go out to an online dating site, find someone and marry them after one or two dates. A business partnership is also a huge commitment, and you should build a strong relationship with potential partners before committing to working with them.
*#4 Hire a lawyer*
Since I started PartnerUp, I often get asked questions about starting a business. You wouldn’t believe how many people ask me what corporate entity type they should choose, how they should distribute the equity in their company between their co-founder and themselves, and a variety of other legal questions. My answer is always the same: hire a lawyer, one who specializes in business formation! Find one that you and your partner(s) all feel comfortable with and who isn’t biased towards any one of you.
Then, meet with the lawyer with all of the partners present and tell the lawyer what type of company you’re starting, what your goals and exit plans are, who’s contributing what to the company, and any other relevant information. Ask the lawyer to put together their recommended entity type and a proposed equity distribution. Go back a few days later and review the lawyer’s recommendation with your partners. Then, if everyone is in agreeance, have the lawyer proceed to form the corporate entity and put together the documentation. Also, never skip a good shareholder’s agreement that covers issues like what happens if one of the partners decides that they wants to quit, what happens if a partner isn’t carrying their weight, and a lot of other issues that could come up. A good lawyer will have already seen many of these issues and should be able to address many of them now, so that you won’t have to later.
*#5 Assign roles. Stick to them.*
When you choose a business partner, you choose them for their skills, experience, personality, drive, and goals, among many other factors. You choose a partner because they can do some things better than you could do them yourself, and in most businesses, one person can’t do it all (some of us learn that the hard way), so assigning roles for each partner to take ownership of seems logical but is often overlooked, which can lead to partners stepping on each other’s toes which then leads to stress on the partnership which generally never turns out well for either of you. Assign roles in the beginning of your partnership during the business planning phase so that you all have a clear definition for what each of your roles and contributions will be within the business. Stick to what you know and let your partner(s) take charge of what they know and are good at. This is the way to build a successful partnership and a successful business.