Starting Up a Business? Three Reasons Why You Should Partner Up
Guest article by Jana Nevrlka, author of Cofounding The Right Way
What distinguishes the lucky shots from a proven success formula? I believe it is a repeated success. So -when it comes to building a successful business - I love to talk to successful serial entrepreneurs and experienced VC’s and angel investors. And the answer that echoes through many of those conversations is the importance of the cofounding team.
What is so powerful about business partnerships?
Combined resources! Multiple studies have confirmed that partnerships have a higher chance to create sustainable companies then solo founders. To create faster growing companies. To be more innovative. To be more creative. To be more stable and resourceful.
What are the 3 main reasons why you should partner up?
Synergies - one plus one is more than two
Done right, there are powerful synergies to be created in a team by joining resources, knowledge, brains and hearts that go way beyond what anyone can achieve on their own. There is this idealised notion of the lonely solo founders who built an imperium from nothing. If truth be told though, they rarely did it by themselves in all the stages and they are more of an exception that confirms the rule. Building a successful business requires a combination of skills and resources that are very seldom found under one hat.
Being on your own also means that you are always the smartest person in the room and there is no one to check or question your decision. From creativity to innovation, teams produce consistently better results most of the time. Another very practical consideration is workload and capacity. With joining forces, not only is there a pool of different skills, expertise and strengths, but also a very practical amount of hands who can do stuff. And in today’s business world, being able to move fast can often mean the difference between success and failure.
For the ones that get it right, the 1+1 can equal much more than 2.
Shared risks and responsibilities
But it is not only a simple business principle of adding resources. There is the psychological side as well. Emotionally, functioning partnerships provide an additional level of comfort to know that the risks are shared too. And not only that, from motivation to perseverance the chances are that functioning team is stronger than any single individual. Anyone who has been through the journey of building a business knows how demanding it is. The stage is full of uncertainties, high pressure and limited resources. Depending on what it is that you are trying to achieve, it can also be full of people telling you that it is not possible. To keep motivated, strong and performing for a single individual is a very demanding task. The benefit of the team is that, combined, the chances are there will be always someone in the team who will be able to keep the motivation as the going gets tough. Combined perseverance is the key! Entrepreneurship is really a hard choice. And there are no success stories without going through some tough times. And, strong teams can handle these typically much better than strong individuals.
From a potential investor’s perspective, team versus solo founder is a very important aspect they look at. If all their investment is hanging on a solo founder it is by definition much higher risk than if the venture is backed by a strong team.
Typically, most successful and fast-growing start-ups would have between two and five cofounders. Having a good functioning cofounding team is very directly and strongly increasing the chance of your business succeeding and access to investors should you need them. Many incubators and accelerators have even as qualification criteria to have a cofounding team. If you can bootstrap / self-invest all the way - this might not be relevant for you. However, if you at some stage plan to raise external investment – it is not impossible as a solo founder, but it is definitely much harder.
It would not be a full picture though if I would not mention that – even though behind majority of successful business are cofounding teams – it is not easy to build them!
Unfortunately, about 70% of business partnerships fail because of cofounders’ issues. So as much as I do recommend partnering up, I am also very strong advocate of doing it thoughtfully and knowingly.
Next to the philosophical question of ‘if partnerships are good for us, why are we so disastrously bad in it?’, the practical question is: can we do something about it?
The answer is yes, we can. It starts with awareness.
So how to do it right? Combining my own experience and expertise, listening to many cofounding stories gone wrong (and occasionally some gone right), working with many cofounding teams and researching everything I could find out there, I believe the secret is in realising how important a decision you are making when deciding to cofound a business with someone else and then following logical steps, in the right order, to do it right.