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What should never be compromised when picking a co-founder

When picking a co-founder for your company, there are key factors that should never be compromised, regardless of your industry.

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picking a cofounder

Setting Yourself (and Your Co-founder) Up For Success

There are many articles online that discuss what an entrepreneur should look for in a co-founder. One of the leading references on this was published on Venture Hacks a few years ago. The truth is that there are rarely scenarios that come together where every piece of these criteria fit together perfectly. Regardless, the aforementioned article and many like it are helpful guides as an entrepreneur picks a founding team.

An entrepreneur might not be able to check every box on the wish list, but there are a few criteria that I believe should not be compromised when picking a co-founder and setting up a company with them. This article is about these “must haves.”

Two is the Magic Number

The correct number of co-founders is two. A founding team should be two partners who 1) work well together, 2) compliment each other and 3) share a vision. All three components of the two-person team are important.

You have to be able to work long hours, work quickly, take and mitigate risks, make hard decisions, and more with this person. You need a truly strong working relationship that will remain strong in a very dynamic work setting. You’ll have to work together intensely at times and totally independently at other times; you’ll have to meet a one-hour deadline one day while having to plan strategically for several quarters down the road the next.

You have to have skills and experience that compliment each other, and trust in each other’s abilities. While you will be working together, learning from each other and sharing a lot of responsibility, at the end of the day it should be obvious which partner will take the lead on each aspect of the business, and on opportunities and challenges that arise. If you and your partner both believe that you each should be leading the investor outreach or the product development effort, you’re probably not a good pairing.

You have to share a vision for the product and the company trajectory. It is important that this symmetry exists not just for launch but also through growth and the eventual long-term plan. You don’t want a partner who envisions being in a lifestyle business if your goal is to sell in 3-5 years!

Finding the right combination of two is the primary challenge, but it really should be limited to two. Any more and politics starts coming into play, personal interest (from one or more parties) may start to supersede the company’s interest and both work and planning will likely become inefficient.

Founders should bring in additional skill and experience to the management team, though, as time, money and opportunity permit. While not equity or title equals, these additions are vital members of the team and should be treated (and made to feel) like owners.

Shared Ethics and Philosophy

Ethics are the most important element in a partnership. A hard truth is that when money is a factor – especially when times get either very good or very bad – many people suspend their morals and opt of self-preservation (or self-gratification). You have to find someone who will keep promises, stay ethical and fulfill commitment throughout. Lawyers will cringe at this next statement, but a legal contract is only as good as the men and women who sign it. This is especially true in a start-up when finances are scarce. Simply put, there is nothing to “go after” if a partner fails to comply with an agreement.

Talk about ethics with your potential partner. You most definitely have to put a legal contract together governing your relationship and company ownership, but it is equally important to make sure you both understand the moral bond that is going to be formed, and that you both embrace it. Look each other in the eye and make a commitment to uphold your agreement no matter what happens.

Equality

Most issues between partners arise due to unequal treatment. This could be as practical as financial disparity or as emotional as jealousy over power and notoriety (and it is often both). Knowing this up front, co-founders should set up the corporate structure and compensation packages to be equal. This is not always easy, as one founder may have been involved longer, hold the IP/patents, etc. I suggest that you find a way to make it happen (and find a partner who is able to make it happen with you).

Ideally, two co-founders will have equal equity in the company, equal voting rights, equal representation on the board, and equal pay (I would even go as far as putting in an agreement that the co-founders will always have an equal compensation package). One partner may have to “buy in” to get this equal partnership. If this is not possible, perhaps that co-founder buys in by taking no salary (or a reduced salary) for a significant period of time (after which the compensation would revert to the equal status mentioned above).

There are some situations where equity (or other) equality is not possible. This can be ok. Set up the relationship so that it is equal as possible – both in perception and reality. Even if this means one party is generous at the outset, equality will pay dividends in the long run. I guarantee that more money has been lost by damage caused by partners clashing than by a business owner being generous with his partner (or generous with employees in general).

Parting Shot

Choose your partner wisely. Trust them and design a truly equal relationship. Be generous with the people who are in a position to impact and grow your business. That recipe will give you your best shot at success.

Hoyt David Morgan is an entrepreneur, angel investor and business strategy leader. He is an investor and/or adviser to a handful of exciting and high growth companies, and has been a part of several high-value exits. He is passionate about customer experience, smart business and helping innovative companies grow... and sailing.

Business Entrepreneur

PopCom designs smart vending machines to automate regulated products

(BUSINESS ENTREPRENEUR) PopCom raises $1.3 million in equity crowd funding to launch smart vending machines that will securely sell regulated products like cannabis and alcohol.

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Dawn Dickson is upgrading the beloved vending machine to thrive in the era of COVID-19. Dickson is the Founder & CEO of PopCom, a black-owned retail technology company whose mission is to “equip entrepreneurs and brands with future-ready retail solutions that allow rapid retail expansion, incredible customer experiences, and powerful sales data.”

Dickson started her entrepreneurial career with Flat Out Heels, rollable flat shoes that fit in a purse. The business was an e-commerce hit, relying on online data analytics to drive sales and growth. She found there was a disconnect in leveraging that technology when she looked for traditional vending machines to sell her products in places with high foot traffic like airports. Like any good entrepreneur, she created her own solution to the problem.

PopCom vending machines use facial detection and machine learning to create an interactive and intelligent retail experience. In 2020, the Columbus, Ohio based company is rolling out secure pilots for automated vending of regulated products like alcohol and cannabis. The machines rely on biometric analysis to verify identity, and can even anonymously evaluate age, gender, and emotional sentiment while a customer is browsing to convert sales. Products can therefore be available on demand with minimal human interaction.

The growth of this technology is timely as COVID-19 continues to ravage retail in the United States. “Vending machines and convenience services are becoming more essential, and retailers are looking for more ways to deliver their products direct-to-customer with less human friction. We are excited about what is to come,” Dickson told BlackNews.com.

And what is to come is coming quickly. Dickson just completed a record-setting equity crowdfunding campaign on Start Engine, being the first female founder in history to raise $1.3 million in just 47 days! Previously, PopCom raised an initial $1.07 million from their first campaign. According to SEC regulations, companies can raise up to $1.07 million from regulation crowd funding sources in a 12-month period.

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Business Entrepreneur

How to choose the right software for your business

(BUSINESS ENTREPRENEUR) What are the best software options for your company? Well, we have a list of suggestions and questions to help you determine what is best for you.

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It’s almost impossible to run a successful modern business without some kind of software to help you stay productive and operate efficiently. There are millions of companies and even more independent developers working hard to produce new software products and services for the businesses of the world, so to say that choosing the right software is intimidating is putting it lightly.

Fortunately, your decisions will become much easier with a handful of decision-making rubrics.

Determining Your Core Needs

First, you need to decide which types of software you really need. For most businesses, these are the most fundamental categories:

  • Proposal software. Customer acquisition starts and ends with effective proposals, which is why you need proposal software that helps you create, send, and track the status of your sales documents.
  • Lead generation and sales. You’ll also want the support of lead generation and sales software, including customer relationship management (CRM) platforms. These help you identify and track prospects throughout the sales process.
  • Marketing and advertising. Marketing and advertising platforms help you plan and implement your campaigns, but even more importantly—they help you track your results.
  • Finance and accounting. With finance and accounting software, you’ll track accounts payable and receivable, and countless variables influencing the financial health of your company.
  • Supply chain and logistics. Certain types of businesses require support when it comes to supply chain management and logistics—and software can help.
  • Productivity and tracking. Some software products, including time trackers and project management platforms, focus on improving productivity and tracking employee actions.
  • Comprehensive analytics. Enterprise resource planning (ERP) software and other “big picture” software products attempt to provide you with comprehensive analytics related to your business’s performance.

Key Factors to Consider

From there, you’ll need to choose a software product in each necessary category—or try to find one that covers all categories simultaneously. When reviewing the thousands (if not millions) of viable options, keep these factors in mind:

    • Core features/functionality. Similar products in a given niche can have radically different sets of features. It’s tempting to go with the most robust product in all cases, but superfluous features and functionality can present their own kind of problem.
    • Integrations. If you use a number of different software products, you’ll need some way to get them to work together. Prioritize products that make it easy to integrate with others—especially ones you’re already using.
    • Intuitiveness/learnability. Software should be intuitive and easy to learn. Not only will this cut down on the amount of training and education you have to provide employees, but it will also reduce the possibilities of platform misuse in the future.
    • Customizability/flexibility. Out-of-the-box software products work well for many customers, but they may not suit your current or future needs precisely. Platforms with greater customizability and flexibility are favorable.
    • Security. If you’re handling sensitive data (and most businesses will be), it’s vital to have a software developed with security in mind. There should be multiple layers of security in place, and ample settings for you to tightly control accessibility.
    • Ongoing developer support. Your chosen software might be impressive today, but how is it going to look in three years? It’s ideal to choose a product that features ongoing developer support, with the potential for more features and better functionality in the near and distant future.
    • Customer support. If you have an issue with the app, will someone be available to help you? Good customer service can elevate the value of otherwise average apps.
    • Price. Finally, you’ll need to consider price. The best apps will often have a price that matches their quality; it’s up to you to decide whether the extra expense is worth it.

Read about each product as you conduct your research, and pay close attention to reviews and testimonials from past customers. Additionally, most software companies are happy to offer free demos and trials, so you can get some firsthand experience before finalizing your decision. Take them up on the offer.

Finding the Balance

It may seem like purchasing or subscribing to new software products will always improve your business fundamentals, but this isn’t always the case. If you become bogged down with too many apps and services, it’s going to make operations more confusing for your staff, decrease consistency, and drain your budget dry at the same time. Instead, try to keep your systems as simplified and straightforward as possible, while still getting all the services you need.

You won’t find or implement the perfect suite of software products for your business overnight. It’s going to take weeks, if not months of research, free trials, and in-house experiments. Remain patient, and don’t be afraid to cut your losses on products that aren’t working the way you originally intended.

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Business Entrepreneur

‘Small’ business was once a stigma, but is now a growing point of pride

(BUSINESS ENTREPRENEUR) Small businesses make up the majority of companies, employers, and money makers of the American economy, that’s something to be proud of.

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American small business

Prior to the Industrial Revolution, all businesses were small businesses. Independent craftsmen served communities with vital services. Small merchants opened shops to provide the community with goods. Lawyers, doctors, and other professionals hung out a shingle to offer their services to neighbors. Small businesses were the norm. Some of the most beloved American companies started out local. John Deere, Harley Davidson, and King Arthur Flour, all got their start as small businesses.

Business changes led to a attitude change

It wasn’t until manufacturing allowed businesses to scale and produce more efficiently that the idea of big business became more important. Post-World War II, the idea of a small business became derogatory. It was the age of big government. Media was growing. Everyone wanted to be on top. Small businesses took a back seat as people moved from rural to urban communities. Small business growth plateaued for a number of years in the mid-20th century. Fortunately, the stigma of small business is fading.

Small businesses are the backbone of the economy

According to the Small Business & Entrepreneurship Council, the “American business is overwhelmingly small business.” In 2016, 99.7% of firms in American had fewer than 500 workers. Firms with 20 workers or less accounted for 89.0% of the 5.6 million employer firms. The SBE also reports that “Small businesses accounted for 61.8% of net new jobs from the first quarter of 1993 until the third quarter of 2016.” Small businesses account for a huge portion of innovation and growth in today’s economy.

Modern consumers support small businesses

According to a Guidant Financial survey, the most common reason for opening a small business is to be your own boss. Small business owners are also dissatisfied with corporate America. Consumers also want to support small businesses. SCORE reports that 91% of Americans patronize a small business at least once a week. Almost half of Americans (47%) frequent small businesses 2 to 4 times a week.

Be proud of small business status

Small businesses are the innovators of tomorrow. Your neighbors want to support small businesses, knowing that their tax dollars stay in the community, and that they’re creating opportunities within their own city. Your small business status isn’t a slight. It’s a source of pride in today’s economy. Celebrate the fact that you’ve stepped out on your own in uncertain times. Celebrate the dirt under your fingernails, literally, or figuratively, that made you take a risk to do what mattered to you.

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