If you have defined your value proposition, established your business model and proven that your idea has enough demand to be sustainable, it's time to take it to the next level.
Perhaps you are at the point where you want to grow your business and are considering partnering. For many, looking for partners is the way to go; they share responsibilities, complement each other's skills and can generate a higher level of capital.
But getting a business to survive the innovation stage and become sustainable is a huge challenge. It is not enough to gather family members or close friends to form the company; the decision must be carefully thought out and certain precautions taken. Following these basic tips can save you money, legal problems and headaches:
1. Incorporate a legal entity: in Costa Rica, for example, the corporation is one of the most commonly used, as it protects personal assets. The type of person will depend on the nature of the business and what works best in a given country. Having a corporation gives formality to the company and allows you to have shares that you can distribute or sell, as you see fit.
2. Draft a shareholders' agreement or partners' agreement: this is a document that serves as a private contract between the partners of the venture. It is advisable to hire a specialized lawyer to draft it and adapt it as the company grows in size and complexity.
Two key clauses should be included: establishing the procedure for accepting new shareholders and determining the process for valuing the shares. Normally the share price varies from year to year, it is not advisable to fix a specific value, but to establish that, in case a shareholder wants to sell its share, an expert will be hired to determine that value based on books and cash flows.
3. Create a board of directors or corporate governance: by law, the incorporation of a legal entity and a shareholders' agreement imply the creation of this body. It is important that its members look after the welfare of the company and are professionals who really bring experience and contacts.
Don't make the mistake of including family members or friends on the board just because you know them well. If they really do not have the necessary experience or skills, it is better to discard them and leave the function in the hands of someone else.
4. Hire to succeed: The value of having a talented team impacts all phases of the venture. In the beginning, the team will shape the entrepreneurial culture and complement the founder's skills and experience. There may be an introverted entrepreneur who is not comfortable presenting his product or service to others, where it is valuable to have an extroverted person with sales experience to strengthen the business.
In more advanced stages, the venture should have a team of executives and board members with a strong track record, as they will be a support in making difficult decisions.
No! We must be clear that the road to success does not always involve partnering, in many cases it makes more sense to start a business alone. But that is a very personal decision, which will depend on the motivations of each person and the nature of the business.
To learn more about the advantages of entrepreneurship alone or in partnership, you can watch our free webinar: Entrepreneurship: alone or in partnership? by the expert, Francisco Pérez, director of LACE.
