Whenever starting out on our entrepreneurial journey, we should be thinking of the end in mind. Your exit strategy defines the blueprint for your business over the next few years, from the idealization stage to when you finally exit by whatever method you have planned. In this process, you will need to build a team, so why not start with a co-founder to help you to share the many burdens of running a start-up business from scratch?
Building a professional team
Getting back to that exit strategy, investors are going to place a higher value on your business if you have a balanced team. Having a business that is totally reliant on you may be good for your ego but will keep investors well clear. If you are like the hub in the wheel where every decision is approved by you, then you simply have not built a business. Investors place a greater value on companies with multiple founders and are likely to fund them more easily. A co-founder should help to kickstart the process of building your professional team.
Building a balanced team
The natural inclination for most people is to seek out those people that are more like them. This leads to a dangerous situation where groupthink goes unchallenged and may result in poor decision-making for the business. A good challenge is invariably good for the business and if everyone comes from the same background or qualifications, there will be no contrarian thoughts. Of course, we need people in the business that are going to challenge our thinking because it is necessary, not simply to be contrarian for contrarian’s sake.
You don’t want to be the bottleneck, where every decision you take is the final call as in a dictatorship. Yes, there are times when the proverbial buck stops with you, but better decision-making comes with a wider source of ideas that can be questioned before implementation.
Complementary skills also lead to every co-founder handling the areas of work according to their skillset, leading to higher productivity and ultimately a business that will attract a higher value. The founding team of a start-up must therefore have expertise in all the areas of a business and that is only truly possible with a team.
Capital avoids risk
As the saying goes, so if you are a sole operator you will find it difficult to attract investors. Another saying is that higher risk should attract higher rewards, so the investor will expect a larger slice of your equity in return for a smaller injection of cash to mitigate for their risk.
Investors prefer multiple founders to improve the stability of the company. Without that professional team, investors are simply buying into you, leaving themselves wide open to risk if you leave or become incapacitated.
Building on that thought, the risks involved in running your company by yourself are magnified without others to help you to share those risks. What happens to the business if you fall ill or cannot work for an extended period? Also, remember that a co-founder shares in the losses you may incur, not only in the profits of the company.