Tips to Finding Your Perfect Co-Founder
The world of business can be tough, especially for those new entrepreneurs who, although have a great new business venture idea, lack the funding in order to get their business off the ground.
Finding the perfect business co-founder, with like-minded beliefs and faith in the business concept can be a minefield! Where do you even begin to forge a new relationship based on a new business start-up concept?
Well, this post will provide all you need to know including what a co-founder is and the role they may play within the business, how to find the perfect co-founder, as well as analysing if joining forces with a co-founder is right for you and your business.
We will also be discussing other alternative funding options that could enable your business to get going.
What is a Co-Founder?
A co-founder is a person or group of people that start a business together or enter the business during a development phase. A co-founder is a separate entity from the businesses’ founder, however, alongside sharing the equity, they also share the risk of the business and the responsibilities of the decision-making.
Investor co-founders are often entrepreneurs themselves and can have other business commitments, but they usually have a lot of knowledge to share. The background of a co-founder can be from the industry that the business is attempting to launch in or an expert in a specific area such as lawyer, accountant, or technology.
Would Having a Co-Founder be Right for Your Business?
Deciding to seek a co-founder and release a proportion of the company’s equity is a big decision! However, the alternative of setting up the business as a solo entrepreneur also comes with its challenges, for example, do you have enough knowledge of all remits of the business to make a success of the venture?
According to Fundsquire, 20% of new businesses fail in their first year and 60% fail within their first three years of business.
With such a high failure rate, business owners should consider the level of risks involved with new start-ups and the best methods to minimise these. There are many reasons that a business could fail; due to the product itself, the market conditions, the management of the company or poor profit margins.
Obviously, there are many steps of business development to be undertaken before the success or failure of a business can be decided, from product design and development, through to manufacturer and launch, that the business would need to navigate through with or without a co-founder.
How to Find a Co-Founder
If an entrepreneur decides that seeking a co-founder is the right thing for their business, firstly, it should be decided what attributes are most desirable for the business.
In order to do so, complete an assessment of which skill sets the current business owners or the sole trader is missing, therefore shortlisting the ideal contributions from a new co-founder in order to balance the skill set.
Of course, financial assistance is required to enable the project to move forward, however other elements of business would also need to be met such as sales, marketing or overall business skills including strategy and business development, therefore making a shortlist of desirable skills is important to identify.
Next, the business idea must be completely finalised with business plans and cash flows drafted in order to successfully pitch the idea to shortlisted potential co-founders.Once the skill set of a desirable co-founder has been identified and the business idea completed, the next step is to seek out the ideal person either from your current contacts or by expanding your network.
Ask yourself where the desired type of person would base themselves, socialise or visit, in order to cross paths with them and hopefully arrange a meeting to pitch your idea. Methods of doing so may include attending start-up events or networking with people within the sector that you are seeking out.
If such research does not provide any leads, expand your network wider, seek recommendations of contacts from friends and family or possibly explore appointment setter services.
Ben Price, co-founder of boiler installation company Heatable.co.uk provided his insights:
“Should an ideal co-founder be found however they are tied up on other projects, discuss consultancy opportunities in order to benefit from their expertise without their full commitment.”
He added:
“Another option would be to recruit for the skills needed while the hunt for a perfect, trustworthy, co-founder continues in order to make progress with the business in the short term.”
Recruitment could be undertaken on a permanent or a short-term contract basis via sites such as LinkedIn or Upwork.
You never know, it may transpire that any successful recruitment develops into the onboarding of a co-founder later on.
What Other Finance Options are there to Start a New Business?
There are a range of alternative finance options available other than funding a co-founder should a new businessman or woman wish to seek a different solution including:
- Business loans or Overdrafts
Business loans are available from a range of lenders including high street lenders, even for new business concepts if the applicant can meet the criteria, typically involving: a minimum age of 18 years old, the applicant is a UK resident, the business will be based within the UK and have the necessary documentation ready for the lender to review including business plans, cash flow forecasts, and projections. If the business is not quite at this stage of development, with the necessary information in order to make an application, short-term borrowing such as the use of overdrafts may be useful for the initial stages of getting a business ready for seeking further funding.
- Crowdfunding
Crowdfunding is a type of funding sourced by the general public, often via the use of a website promoting the new concept. There are often two types of crowdfunding as follows; stake offered within the business in return for funding or simply borrowing the funds. Crowdfunding can be very successful especially if the business concept is new and unique.
- Government grants
From time to time there are Government grants available for entrepreneurs to apply for, depending on the economic climate and industry of the business idea, for example, research and development are often supported.
Currently, the UK Government is supporting start-ups by providing Government-backed loans between £500 and £25,000, along side business guidance such as assistance with business plans and mentoring.
This type of loan is an unsecured personal loan, repayable over a period of 1 to 5 years, with similar lending criteria as the business loan discussed above, although there is also an additional restriction that the business must have been trading for less than 2 years. The current Government backed loan scheme for start-ups does not involve any application or early repayment fees, however the interest rate charged is 6% per annum. For further details on the start-up loans available, please check out the Government’s website.
Summary
In this post, we have been discussing why an entrepreneur may seek a co-founder in order to balance the necessary skill set to develop, launch and market a successful new product or service. We have also covered a range or recommended steps involved with finding a co-founder that is a right fit for your project.
In addition, we discussed a range of alternative financing options available to new business start-ups should either a co-founder is not favoured or in the situation where one cannot be found.
