Deciding whether to start your business solo or as part of a founding partnership is one of the most important questions to answer when launching your venture, and will shape the course of your agency for years to come.
There’s no right or wrong answer, and both paths have merits and potential downsides.
Some of the pros and cons of having a business partner include:
- Many hands make light work – it can be a big advantage at all phases of development to have more shoulders to the wheel. Whether it’s cracking through big projects or handling simple day-to-day decision-making, if all founding partners work well together then things naturally progress faster than if everything is dependent on you alone.
- Complementary skills – ideally founders will bring different strengths to the business, and this can add necessary depth in skills. If you’re strong in sales but an admin disaster, it could be worth partnering with someone who has a more natural focus on processes, policies and infrastructure while you lead the business development charge.
- Broader combined networks – who you know in business is critically important, both in terms of building a customer base and as regards resources, support and advice. Founders who all bring strong personal networks can create a valuable hub for business growth.
- Two heads better than one – the growth of your business will hinge on a handful of big decisions, and be shaped by hundreds of additional small decisions made on an ongoing basis. Having a trusted partner with whom you can review, evaluate and challenge decision-making can be invaluable.
- Mutual support and motivation – building a business from a standing start always involves frustrations, setbacks and some tough knocks. Facing these alone can be a struggle, and having co-founders in the trenches with you to pick you up, refocus you on the big picture and share the emotional rollercoaster can carry you through the tough patches, as well as keeping you accountable with key business goals.
- Restricted autonomy – for all the value the right business partner can bring, you do cede a degree of control when partnering with anybody else to run a company. Good teams in business manage to make things work, but it’s a key factor to weight in the balance.
- Slower decision-making – depending on how your partnership works, you do risk slowing down the pace at which your company can make decisions and implement change if you need to debate every move. Clear role remits and differentiated areas of responsibility can mitigate this, leaving only key topics to be discussed.
- Equity complications – involving a co-founder also means sharing some of the equity in the company. The right shareholders agreement is vitally important here, ensuring all possible future scenarios are covered and avoiding serious complications if your partnership doesn’t work out, or your co-founder decides to move onto other projects.
- Different visions – a major risk in co-founding a company with someone else is that your ambitions and goals won’t align. You may want to grow faster, hire more people, take the brand in a different direction, or expand overseas, while your partner may have other ideas. Having a clear, shared vision is the glue that holds successful leadership teams together.
- Profit sharing – as co-owners of the business, partners will usually be entitled to share the profits generated. If there is discord among the leadership team, or the feeling that one or more partners is not contributing evenly to the company’s growth and success, it can cause friction when rewards continued to be shared out.
Choosing Your Business Partner
If you are looking at launching your agency with someone else, there are some helpful steps you can go through to maximise the likelihood that you will form a successful team together:
- Get to know each other in depth – just because you’ve worked well with someone in the past or get on with them socially doesn’t mean they’ll make the ideal business partner. In addition to social chemistry and compatibility, it’s important to have a strong understanding of things like work ethic, values, short and long-term goals.
- Do a mutual Strengths and Weakness self-analysis – sometimes doing a formal exercise such as listing and exchanging self-perceived strengths and weaknesses can be useful to build transparency in a partnership. If your co-founder acknowledges up front that they love marketing and design but struggle with finance, it won’t come as a surprise later down the line and can be planned for accordingly.
- Define roles clearly – the key to harmonious partnerships is setting clear expectations. Co-founders who plan to just ‘get started’ and work through tasks as they appear will usually struggle, where teams who assign areas of responsibility and deliverables have a better framework to operate within.
Consider a Non-Executive Director
Another path to consider is a non-executive director, or NED. This is usually someone with mature business experience who is involved in providing high-level guidance to the strategy and direction of your agency, without being involved in the day-to-day running of the company.
This is similar to the role RecruitHub plays when launching new recruitment agencies – providing an experienced advisory panel who can add insight at critical junctures without getting under the founder’s wheels.
An NED should be someone who adds value to your company’s development based on their commercial acumen and ability to provide input on big-picture items.