Building a Business with a Partner? Read This First!

Starting a business with a cofounder can be a great way to stay motivated, share the workload, and generate fresh ideas. Having a partner means you can celebrate successes together and support each other during tough times. But even the strongest relationships can be tested by the demands of running a business. Misaligned expectations or unresolved conflicts can lead to failure.

A recent HBR article by Alisa Cohn, How Cofounders Can Prevent Their Relationship Derailing, offers useful insights. CB Insights found that 7% of startup failures were due to team disharmony. Let’s look at some steps to safeguard your partnership.

To read the full article, use this link: https://hbr.org/2022/04/how-cofounders-can-prevent-their-relationship-from-derailing. The article may be behind a paywall, but HBR allows users to access a few articles each month without charge.

The Cofounder’s Prenup

Cohn suggests creating a Cofounder’s “Prenup” – a structured conversation to clarify expectations and avoid future conflicts. Think of it like a prenuptial agreement, but for business partners. It’s a guide to help you navigate key topics that will impact your working relationship.

Here are some essential questions to discuss:

? What are your core values and motivations? Do you prioritise fairness, wealth, innovation, or something else?

? What culture do you want to build? What kind of work environment do you envision?

? What is your long-term vision for the business? Are you building to sell, or do you want to create a legacy company?

? What is your working style? Do you thrive on structure or prefer flexibility?

? How do you handle stress? Understanding each other’s stress responses can prevent unnecessary conflicts.

This conversation might feel awkward, but it’s far better to uncover differences now rather than years down the line when it’s harder to address them.

Define Roles Clearly

In the excitement of launching a business, many cofounders skip the step of clearly defining roles. But vague responsibilities can lead to frustration and slow decision-making.

Avoid generic titles like CEO and COO without defining what they actually mean in practice. Instead, agree on specific responsibilities and decision-making authority. Consider setting financial limits—for example, allowing each founder to spend up to ￡5,000 without consulting the other.

One common mistake is insisting that all decisions be made jointly. This can create bottlenecks, especially in fast-moving industries. A good example is Quincy Apparel, where two cofounders, reluctant to strain their friendship, made all major decisions together. This slowed them down, ultimately leading to the company’s failure and damaging their relationship.

For more on Quincy Apparel’s story, listen to my analysis of what went wrong. The audio files can be found here. https://why-start-ups-fail.com/why-startups-fail-podcasts/

Please note that this is a beta site, but please enjoy the content that is posted online.

Discuss the “What If?” Scenarios

No one can predict the future, but you can prepare for common challenges. Discuss these questions:

? What if we strongly disagree on strategy?

? What if we receive an acquisition offer—one of us wants to sell, but the other doesn’t?

? What if one of us wants to leave the company?

Thinking through these scenarios in advance can help prevent conflicts or at least make them easier to navigate when they arise.

Schedule Regular Check-Ins

Beyond formal business meetings, spend regular, unstructured time together. This builds trust and strengthens your relationship.

If you work in different locations, this becomes even more critical. One of my business partners is based in Guangzhou, China. We rely on WeChat and Zoom to stay connected. We check in at least every two weeks, even if there’s nothing urgent to discuss.

Cohn cites an example of cofounders who found that when they didn’t speak regularly, small misunderstandings built up, leading to unnecessary tensions. Their solution? A recurring, non-cancellable call. It felt time-consuming, but in reality, it saved them hours of resolving miscommunications later.

If possible, schedule in-person meetings occasionally, especially now that travel is opening up again.

Hold Conflict Meetings

Most people avoid tough conversations. But disagreements are inevitable in business, and addressing them early prevents bigger problems later.

Cohn suggests scheduling “conflict meetings” from the outset, even before you have issues to resolve. This normalises difficult conversations and gives you practice handling disagreements constructively.

A useful resource for improving these skills is Crucial Conversations: Tools for Talking When Stakes Are High by Patterson, Grenny, McMillan, and Switzler. Of course, it is available on Amazon.

Final Thoughts

Launching a business is challenging enough without cofounder conflicts adding to the stress. Discussing expectations, defining roles, and scheduling regular check-ins can prevent misunderstandings and ensure your partnership stays strong.

If you’ve found this episode helpful, share it with a fellow entrepreneur. And if you want more insights like these, connect with me on LinkedIn. https://www.dhirubhai.net/in/jeremy-gray1/ and subscribe to my newsletter(s).

Or even better, use this link to set up a 30-minute conversation: https://calendly.com/3-continents-consulting/open-discussion-how-can-i-help-you?back=1&month=2025-03

Until next time, remember: planning ahead saves a lot of headaches later!