The untold stories of the every day life of a solo-entrepreneur can be a challenge.
You are the marketing department, accounts receivable and payable, customer service and much more. It may seem as though 24 hours is just not enough time to develop and scale a business, while attempting to invest time into sharpening those core skills that may not be your strength.
In addition to being the "one man band" of your business and generating sales, you may have grown quite guarded and protective of your vision, which can ultimately lead to a financial plateau. If you have experienced two or more consistent years of slow growth as a solo-entrepreneur, it may be time to consider investing in a co-founder.
My journey in building my fourth company came with a unique set of challenges that I was unable to handle alone. My company grew rapidly, and it was difficult to play every role in the business alone. There were several areas that were ignored at times. For example, with massive growth, there were times when our marketing outreach obligations slipped.
It was time to on-board a co-founder.
As a one man band, you have professional deficiencies in specific areas that you think you can handle. However, as your company grows, you may not have the time to continue to micro-manage every aspect of your business. The biggest mistake that ambitious entrepreneurs make in the early phase is focusing on hiring contract virtual help to assist with many of the administrative tasks at a lower cost, which is a huge mistake. Your assistant cannot fill in professional deficiencies within your business model, they will only limit your administrative obligations.
The role of a co-founder can make the ultimate difference. Besides, a strong co-founder can be very appealing to stakeholders and venture capitalists when you are ready to raise funding to expand and go to market. You are gaining such a valuable asset that can have a long term value play, which you may not experience if you continue to do it on your own.
Here are a few things to consider.
Know your own weaknesses.
Every solo-entrepreneur has administrative and/or leadership deficiencies. Let's face it, you may be great at business development, but maybe you are struggling with accounting. Maybe you are great with accounting but you are struggling with customer acquisition. As a one party leader, you need other leaders who are strong in the area(s) where you need assistance, far beyond an administrative capacity.
The best way to identify the right co-founder is to identify the developmental aspects of the business that you need to strengthen. Whether you are seeking one or multiple co-founders, make sure you are choosing them based on their strengths that fill in your professional gaps.
Consider your exit strategy.
The greatest lesson I learned along this journey is your co-founder(s) must understand your long term interests. Whether you are building your company for acquisition, long term cashflow or just passionate about an idea; your co-founder must understand your exit strategy in order to be an effective asset to your company.
As part of your due diligence, be transparent about the goal of your business. Choose a co-founder who can contribute successfully to your exit goals and create a strategy to achieve your intended outcome.
They must have "skin in the game"
I learned this lesson the hard way over a decade ago -- a co-founder needs to be invested in the company. The mistake many ambitious solo-entrepreneurs make is trading their IP without ensuring the other party has a vested interest in the growth of the company. Several high profile cases of such practices have recently been settled in mediation due to the miscommunication of a fiduciary interest.
Seek the advice of an attorney and create bi-laws and investment clauses, which outlines the role, expectation and outcome for your new co-founder. It is best to ensure financial consideration during the on-boarding process and discuss the time frame for holding funds in the company operational account to ensure performance under the contract terms.