Before You Bring a Co-Founder on Board, Ask These 5 Questions
Our expert this week discusses how entrepreneurs can test out a potential partner before going all in.
Opinions expressed by Entrepreneur contributors are their own.
Q: When I have found a potential co-founder is there a systematic way to find out, if we two are compatible with each before becoming actual co-founders? And what should I offer to him or her in exchange for their efforts, if I haven't achieved traction yet?
-- Dmitri Pisarenko
A: The first question to ask is why you want this person to be your partner. Don't bring someone on just because you're in dire need for support -- make sure they have long-term potential.
The fastest way to land in a failing relationship is by making too quick of a decision to who the yin to your yang is. Of course you are going to like anyone who "says the right things" but just like any relationship, you need to dig further and analyze compatibility.
Assuming you're in the driver seat and have the concept, ask your potential partner to lay out their vision and action plan.
Also, consider these following five questions:
1. How have they gone about doing similar things in previous roles?
This is arguably the biggest hire you'll make in order to take the company to the next level, so don't be quick to take someone who is all words and no action. It will be easier for them to assimilate to the demand of the role if they've done something similar before. On the flipside, if you liked them initially based solely on conversation, you may find flaws in their work product which will prevent potential loss down the road. Have them do a presentation that illustrates what they've done and that they understand what you want them to do. This could be done through a PowerPoint presentation, an app prototype or other task.
2. What types of metrics do they use to measure activities?
By finding this out, it can result in several different scenarios. One, they measure in a similar format as your company does. Two, they measure results in a different format that could potentially streamline processes already in place. Three, they have no sense of measure metrics which should raise a red flag. Or four, they track the wrong metrics which needs to be discussed prior to them joining you as a partner.
3. What is their time frame and expectations for growth?
Signs of projected growth can help gauge whether they play it safe, risk it all or fall somewhere in between. It's alarming if they have unrealistic projections of revenue growth without providing both historic company and industry trends, or they may project an impractical surge in new hires, showing the lack of concern for taking the time to find quality talent.
4. How much time has been spent with them?
Spend hours together over many days. Spend half a day white boarding concepts and ideas. Also, ensure you get some social time in together. I personally like going for walks or a hike with someone as you have hours to talk and no other people around. Or consider inviting them to your home for dinner.
A partner is a social and business relationship. You're going to share personal financial information, so you need to like them and trust them. I also believe you need to make sure their hobbies won't be intrusive. It's a partnership, so if they are going to be golfing all summer while you're working that will cause a lot of turmoil.
5. Are you asking them for a capital investment?
If so, you should ask to see their personal financial statements. If not, then they are technically an employee of yours assuming they have less equity if any at all. Don't take people's word who you don't know that they actually have the money they say they do. I take the word partner literally -- you should expect them to be transparent and communicative with you.
If you are in fact asking them to create a pseudo business plan or spend an inordinate amount of time, you can offer to pay them. Depending on the business and their experience, you may offer $1,000 to $2,500. It shows you're real and committed.