4 times when business owners need a partner or co-founder
Source: Bentley University & Shutterstock
“I need a business partner. I really think I do...?”
This is becoming an increasingly common topic of discussion during business counselling sessions with entrepreneurs. Many feel having a co-founder or partner is just the way to go, while others wonder if it really is a mandate given most of the Unicorns and recent success stories seem to have at least two or few hands on deck.
While statistically it is tough to determine if a business will do better with a partner, there is a lot of data that suggests about 70% of business partnerships fail (that’s for another blog). Having said that, having a business partner does have its advantages like; sharing the risk, workload, moral support, and more.
So when a client comes wanting to figure out if they need or want to take on a co-founder or business partner, we use the BEAM model to get arrive at the answer. I am sharing it here so it may help anyone of you out there –
BEAM Model (R)
Business development and access – a founder or business owner eventually exhausts their family and friends as initial customers quickly. This is when a partner may be able to introduce the brand to an entirely new set of customers. These could be from a different geography, social set, psychographic or socio-economic set otherwise untapped or unavailable earlier.
Possibilities - many businesses engage with business introducers with a basic plus incentives model, or for specific geographies, or a sales head with limited ‘sweat’ equity basis performance, depending on the product or service in question.
Expertise/ skill gap – this is usually a good reason to take on a partner. Not everyone is good at everything. Many people have the capital but don’t know how to use it, other times you may have the talent or expertise but lack the finances to take off. Subject matter experts are usually a good way of plugging a gap.
Possibilities – check if you can hire someone, or need a co-founder to work with a team. Having someone who a deep understanding of an area is usually worth giving up control and equity for the sake of sure and deliberate growth and success. Many founders explore the option of ‘sweat equity’ in exchange for the skill brought on board.
Action gap/ work load sharing – this is for business owners who get overwhelmed by the unending to-do lists and things that need to be done by one person. Since most people are not superhuman, they sometimes take on a partner to ensure stuff gets done!
Possibilities – have clear task and professional boundaries, and a plan to resolve any conflicts arising from the occasional overlap. This is when people typically bring on sales or operations or HR heads with a stake to incentivise performance.
Money / capital – the fire power behind all the talent and ideas. Today’s ‘idea economy is brimming with ideas, enthusiasm, experience and expertise. What one needs is a bit of money magic to get things moving.
Possibilities – the funding ecosystem is evolving quickly in India with multiple options like Angel Investors (think Shark Tank), Venture Capitalists, Crowd Funding, Private Equity, Debt Financing and then some. The source of finance depends on the business needs, the founder/owners willingness or comfort with parting control or ownership depending on the nature and stage of the business and its valuation and profit potential.
To summarise, it is not necessary to have a business partner or co-founder. Having one comes at the cost of control, equity and freedom. If you do want to engage, the BEAM Model should be helpful in making sure you do it for the right reasons and not because you feel you should or because someone told you so. After all, it is your business shaped by your vision and decisions. The buck does stop at you.
