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BUSINESS PARTNER BUT WHO!

THE FOUNDER’S DILEMMA IN BUSINESS

You have had this idea boiling up in you for a while, and you have finally decided to turn it into a business. You have a long list of important decisions to make. At least the first three will include choosing between solo-founding and co-founding. Deciding about your business ownership is crucial to giving it structure, as this will have long-term implications. A business without a proper structure will struggle to get the “well-oiled-machine” stage.
THE FOUNDER’S DILEMMA IN BUSINESS

You have had this idea boiling up in you for a while, and you have finally decided to turn it into a business. You have a long list of important decisions to make. At least the first three will include choosing between solo-founding and co-founding. Deciding about your business ownership is crucial to giving it structure, as this will have long-term implications. A business without a proper structure will struggle to get the “well-oiled-machine” stage.

There is a commonly known sentence which starts a book entitled The Founder’s Dilemmas, by Noam Wasserman. It goes: “ it is so unfortunate but true: if entrepreneurship is a battle, most causalities stem from friendly fire or self-inflicted wound. We often laud and encourage entrepreneurship! But how does one go about it? There are always recurring themes that business founders are always grappling with, and one of them is about business ownership. Do I start solo, or with partners? Who do I choose as a partner? I personally have wrestled with such questions, made mistakes, reframed my partnership strategy, managed to keep my head above water for some time, and finally fully recovered from my mistakes. In this article, I share my experience and provide advice to intrepid business adventurers.

Before we dive into solving the dilemma of whether you should fly solo or not, let us look at different types of business ownership.
There is quite a number of business ownership types, and before you decide which one to go for, you should know which ones are recognized. Law N°17/2018 of 13/04/2018 governing companies in Rwanda recognizes 4 types of companies:

1. a company limited by shares (if the company fails, shareholders must give up to the value of the shares they own to help pay the company's debts)
2. a company limited by guarantee; (a company that does not raise money from shareholders but that has members who promise to give a particular amount of money to help pay the company's debts if it fails)
3. a company limited by shares and by guarantee (combining the first and the latter)
4. an unlimited company (a company whose shareholders will have to use their money or property to pay the company's debts if it fails financially)

Article 3 of the aforementioned law states, inter-alia, that: “One or more persons may form a company by pooling together resources or services for business purposes”.
Solo-founding vs. co-founding
People who go solo when they shouldn’t, will increase their risk of failure. In contrast, people who bring cofounders when they shouldn’t usually face team tensions they should have avoided. But what separates solo founders from those who build founding teams?
Flying solo
Solo founding will come with short and long term consequences. In the long run, solo founding might hinder a business from attaining its full potential or make it fail. By remaining solo, founders may prioritize control overgrowth or might be overconfident in their passion for the business idea and underestimate the need for help.

Co-founding
Although there are many good reasons for solo-founding a business, many founders will decide to bring cofounders on board for both tangible and intangible reasons. In his book The Founder’s Dilemmas, Mr. Noam Wasserman groups tangible reasons for co-founding in three types of capitals:
• Human capital: another brain on the table, so the core founder does not have to do all the thinking.
• Social Capital: unless the core founder has a particularly rich set of relevant contacts,
• Financial capital: cofounders’ financial contributions will help the startup. Also, if you are trying to raise funds, investors will be more attracted to your business If you already have someone else on board but yourself.
Intangible reasons for co-founding comprise task preference, support and validation, and collaboration.

The cofounding myth has been debunked!!!
In January 23rd, 2018 Jason Greenberg of New York University and Ethan Mollick of the Wharton School published a revolutionary paper entitled “Sole Survivors: Solo Ventures Versus Founding Teams” which was a report on research they had undertaken to assess where best success lied, between flying solo and partnering in creating business. They examined “the implications of founding alone versus as a group by using a unique dataset of crowdfunded companies that together generated approximately $358 million in total revenue”.
The results they came to are astounding; they found that “companies started by solo founders survive longer than those started by teams. Further, organizations started by solo founders generate more revenue than organizations started by founder pairs and do not perform significantly different than larger teams. This suggests that the taken-for-granted assumption among scholars that entrepreneurship is best performed by teams should be reevaluated”

So there you are! If you want your new business to succeed, you're better off starting it by yourself.
But you are free to venture with partners. If you decide to partner, how do you know that this old friend, that colleague, or this new amazing dreamer talented acquaintance is the one?

My business founding account
In 2013 I co-founded a company called Kivu Treasure.co. Ltd, now called TEMACO BUILDERS with a former foreign colleague. I had had a dream of opening a concrete and tires company ever since I was a kid, and had spent a great deal of time preparing for it.
This colleague had what we saw earlier in this article as SOCIAL CAPITAL. He promised he would link our company to his friends in his country who would help us acquire all the machinery needed for our company to get up-and-running. I went ahead and spent all my financial savings on renting and equipping our new offices, and took care of all other administrative matters.
To my surprise, my friend left the country without my knowledge and was not to come back.
I was stuck in an office with no activities. I had spent all my money and could not move forwards. I could barely pay my self a taxi fare, which is nothing more than 2$. I had such a hard time contracting any financial loan in the name of the business, as I needed my partner’s approval. In fact, I had given up 50% of the control of the business as a core founder, and could not have made any major decision without my co-founder.

I will spare you all the details of how I finally managed to get him back to the country so that we could dissolve our partnership. I had to pay a two-way flight ticket and bare hotel costs for my nightmare to end.
I have been flying solo since then, and TEMACO BUILDERS is running at a promising pace.
Now, what did I learn from my mistakes? And what should you learn from them?
Some traits, especially tangible ones(capital) in a potential cofounder can be obvious, or easy to spot. It is, however, harder to spot in a cofounder some personal traits. These are, for instance, their passion, work ethics, risk tolerance, honesty and integrity, emotional stability, and many more.

As a core founder, you need to take your time, talk frankly to the people who have worked with or know your potential partner well enough. More importantly, the “try before you buy” technique can come in handy. By using this technique, potential partners get to know each other in actual work settings or preliminary projects before committing to working together.
Bringing cofounders on board is a significant risk, and sometimes worth taking, but remember, evidence-based research has proven that if you want your new business to succeed, you're better off starting it by yourself! Getting a co-founder can be a profitable move. But consider these ideas I borrowed from Aytekin Tank:

• The marriage metaphor: marriage is a beautiful idea (support, honesty, and trust). But marriage is also idealized, and there are a lot of factors that go into a successful one. And if you aren’t prepared to see your co-founder as someone that you’re in a full-time relationship with, then you may want to consider seeing other people;
• Once you commit, it’s hard to go back: cofounding is not just aligning on the basics of a founders agreement. It’s also deciding the equity breakdown, vesting schedules — to ensure that one founder can’t just slack off with their equity already in hand, intellectual property agreements, and more. Once you commit, the system is designed for it to be difficult to call it quits even with a termination agreement
• You don’t need a co-founder to show that people support your product
• There’s no formula for success
Willing to venture into business? Make the most informed decisions. As for me, I wish you the best of luck.

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