How to Find a Cofounder
How difficult is it to find a cofounder? Indeed, there are several factors you have to consider when it comes to establishing a business partnership. Today, we’ll look into the whole dynamic of building a business partnership.
Building a business from the ground up is tough work. That’s why getting an extra hand in the entrepreneurial journey can move things faster. A business partnership helps you make progress in a shorter amount of time.
A cofounder not only shares the burden of leadership and accountability but also provides valuable resources and expertise to the business. There have been many instances that cofounders helped avert crises in a company and even introduced innovation.
For example, Coca-Cola cofounders AJ Brustein and Yong Kim, stepped up to the challenge of solving the company’s long-time dilemma of stock distribution in convenience stores. The company’s out-of-stock problem had them losing billions of sales to other drink makers. Hence, they birthed a staffing platform called Wanolo to help in the warehouse operations which led to Coca-Cola’s instant restocking.
Since then, Wonolo became a successful startup raising $32 million in funding. And of course, Coca-Cola secures its title as one of the top beverage companies in the world.
As you can see, co-founders play a big role in the growth and progress of a company. Startups and large enterprises alike have recognized the importance of this relationship.
But of course, it doesn’t always turn out well. Sometimes the wrong business partner leads the business in a downward spiral. Bad partnerships can lead to a stressful workplace. This is why you have to find a co-founder that shares the same values as you do.
To better understand the steps on how to find a co-founder, let’s first study the whole picture of what a business partnership entails.
What is Business Partnership?
A business partnership is a formal agreement between parties to run a company. The arrangement is between private individuals or large enterprises. Depending on how it’s negotiated, the parties involved will share the profit and the liabilities.
But what exactly is it for?
Startup owners use partnership as a solution due to lack of funds. Raising funds is the most common dilemma that early-stage startups encounter. An investor can offer beyond financial help, such as technical expertise, mentorship, and other resources. Hence, business partnerships provide business owners with a lot of room to grow.
Types of Business Partnership
When it comes to the dynamics and division of assets, there are several types of partnership arrangements. Here are the most common ones:
1. General partnership
A general partnership is usually between two or more individuals who run the business as co-owners. The partners get an equal share of profits and losses.
In this setup, there is a partnership agreement that indicates a partner’s role and responsibilities. The agreement also includes the closing action if the partnership comes to an end or prematurely dissolves.
Profits in this type of partnership taxes on a personal income level, not at the company level. This makes the partnership convenient, low-cost, and easy to change.
Because of its flexible nature, it gives the partners full control of running the business how they see fit. However, the downside to this setup is it puts the owner’s individual assets at risk and makes them fully liable for all debts.
2. Limited partnership
Limited partnerships take on a more structured arrangement between partners. The state authorizes this type of business partnership, and it commonly acknowledges one partner as the active owner. The limited partner(s), on the other hand, would only provide financial support.
This setup is geared towards investors who are only focusing on financial returns, not its debts and liabilities. This means limited partners don’t have decision-making rights and assume only a few responsibilities in the operation. You can think of limited partners as the “silent partner” in the background who’s just shelling out the needed cash.
3. Limited liability partnership
A limited liability partnership (LLP) is similar to a general partnership, except for the scope of liability. Both partners will bear full responsibility for the debts and legal liabilities of the business, however, they are not responsible for their fellow partner’s errors. Pretty much, it’s every man for himself.
Keep in mind that not all states permit LLPs. They are often for certain professions such as doctors, lawyers, and accountants.
4. Limited liability company partnership
A limited liability company (LLC) partnership is made up of two or more owners who are referred to as “members”. Members are shareholders who do not take on responsibilities. Under this agreement, the members’ personal assets are protected and they have no liability for the business’ actions or debts. However, they can be held responsible for other member’s actions.
This setup is ideal for businesses with multiple investors. One person is usually appointed as the general partner so the members won’t have to bear unlimited liability.
Remember, the kind of arrangement you choose for your business will dramatically affect your operations. If you give a partner decision-making rights, they can cause a major shift in your performance. Hence, you must do so with caution. Consult a lawyer and study your legal rights before going into any type of agreement.
How to Find a Co-founder
Now that we know how business partnerships work, it’s time to learn how you can establish them. Here are some tips on how to find a co-founder that fits your business:
1. Personal Network
One of the first places you should look into is your personal network. Browse through your contract list and review the portfolios of your fellow entrepreneurs. If you’ve attended mentorship programs or conventions, you’re bound to run into some great people. Take time to look through names and see if you know anyone whose background is relevant to your industry.
Keep in mind, friends and family are not ideal when choosing a cofounder. As much as possible, avoid mixing your personal life with your professional one.
If you have a limited network or no one seems to fit your type of business, then ask for referrals. Surely, your fellow business owners would have their own set of connections. You can also look into local agencies that hold startup events and ask them for referrals.
As another option, find names who are in the same field as you are. The key to finding an ideal co-founder is if they have the same interest you do. Introduce the idea of monetizing a concept and pitch a business partnership to them.
3. Search online
If you’re having trouble finding a co-founder in your network, then extend the search beyond it. The Internet is a great place to find and recruit people. You can use platforms such as CoFounderLab and StartupWeekend to interact with fellow entrepreneurs. These platforms are designed to match you with the right co-founder and help you save time in negotiating a deal with them.
Work with Full Scale
Did you know that Full Scale is a co-founded business as well? The company is owned by two veteran entrepreneurs, Matt DeCoursey and Matt Watson. Their desire to help out other business owners led them to create a company that provides affordable operation resources. Full Scale has also hosted several events that allowed entrepreneurs to network with investors.
Full Scale specializes in helping other entrepreneurs reach their startup goals. Whether you need a website for your business, a marketing campaign, or simply mentorship in management; we’ve got it for you. We have seasoned talents and resources to kickstart and scale your operations.
Want to learn more about Full Scale? Get your FREE consultation today!