You’ve got an idea and the technology to establish your own start-up, you’ve begun working, but have discovered fairly quickly that…oops, something isn’t quite right yet in the wonderful plan you’ve been dreaming of for so long and are on your way to making happen. Something significant seems to be missing to complete the puzzle. You need a top-notch key-star that will help you launch your start-up and make it a winner!
Is the missing key-star that will make your company a winner in the technological field? Or perhaps the marketing field, one that will lead you to the start-up’s winning “go to market”?
Here are 3 professional tips that will help you add the ideal partner to your venture.
1. Add a business partner with added value, who can lead your venture forward
It is very important to thoroughly evaluate who you introduce as a partner. The partner should be someone with value who can contribute to the rise of the company, someone with experience and stature. In addition to their contribution to the leveraging of the company, investors receive executive summaries, and one of the first things they examine is the venture’s partnership composition. Sometimes the addition of a valuable partner to the venture will raise company value. In these cases, whereas a potential investor will examine the start-up company, his name is also worth money. When adding partners to your start-up, you should take this into consideration, even if the partner demands higher payments / options.
2. Examine the partner’s potential commitment to the company.
After you have understood the importance of adding a top-notch partner and after you have determined which function is critical for leading the companies’ activities, you should check your potential partner’s commitment to the company. For instance, it is important that you agree with the potential partners on the time they are willing to invest, so that you can correctly divide up the percentages of the company.
Think about it in advance and not after you have already included them legally as partners.
Some more insights to think about: when allocating partners in the initial stage of launching a start-up, there is common opinion that the company’s percentages should be divided equally among all company partners.
According to Gil Keret, CEO and Founder at Brooks-Keret: “If your potential partners wish to contribute their experience and contacts, but only for a few hours a week, they should not be considered as founders. However, if they are interested in joining the company and committing themselves completely to the venture, they are as valuable as an original founder. At this stage, try to simplify the process and divide the company percentages in a logical manner that will increase motivation to all sides.”
3. Conduct negotiations and formulate a binding agreement.
You’ve decided on your partner – congratulations! Now comes the stage of negotiation with the partner regarding the company’s management, including: role, options, percentages, terms, vision, etc. This comprises the beginning of the mutual business relationship, so it is important to do it right. When conducting a negotiation, it is of critical importance to do 3 things: Determine the degree of seriousness of the involved parties; Prepare a plan of actions to continue the dialogue that will lead you eventually to a binding agreement among the parties; Focus on shared interests while making an in-depth study that will enable you reaching the common ground.
“The central idea is to explore the potential partner’s real contribution to the company. If you think there will be a dramatic change with their addition to the team, take them on and seek a way to enable them to contribute as optimally as possible.”
Written by Gil Keret – Co-Founder & CEO at Brooks-Keret Financial Management