a business plan is important as it forces the founding team

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Written by Jonathan Chan | April 25, 2022

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There’s an art to creating the perfect founding team.

A startup can have all the potential in the world, but nothing can derail things faster than its “people problems.” In a study about startup performance , venture capitalists attribute 65% of company failures to problems within the startup’s management team.

Make no mistake, more than anything else, startups live and die by the people that bring them to life.

Ideas can pivot and evolve as they grow, funding can always be found somewhere else, the market will always change with a never-ending supply of competitors. But the team that brings it all together forms the company’s DNA.

So, let’s get down to it, let’s break down what makes the perfect founding team!

Table of Contents

Why You Need a Team

The magic number, what a founding team should look like, what kind of founding team do you need, the perfect team has:, where to build your team of founders, founding team faqs.

While there’s nothing wrong with being a solopreneur, you have to realize that you’re playing with a handicap from the get-go.

According to the Startup Genome Report , solo founders, on average, take 3.6 times longer to scale when compared to startup teams of two or more. It also found that teams were more likely to attract investors and experience success in comparison to solo founders.

Why is that? Well for one thing, to investors, it’s a vote of no confidence.

It doesn’t matter how hard-working or talented you may be, or how brilliant your idea is. To investors, it looks like no one else but you believes in your idea.

But most importantly, you won’t have a partner to help pick you back up when things go wrong. In the startup world, the highs are high, and the lows are low.

When you inevitably hit the trough of sorrow, it’ll hurt, and picking yourself back up is a hell of a task. Having a friend to talk to, who understands exactly what you’re going through, to be there when you need it makes all the difference in the world.

While undoubtedly the most famous, Steve Jobs was not the only founder of Apple. It took the collective efforts of Jobs, Steve Wozniak, and Ron Wayne to get Apple off the ground.

Bill Gates had Paul Allen, Richard Branson had Nik Powell, and while Arianna Huffington may be the editor-in-chief and face of The Huffington Post, it was a team of four founders that brought it to life.

It’s not impossible to go solo but a startup is hard enough, so why go it alone?

Don’t Skip: How to Start a Startup (Advice from 16+ Successful Founders)

Here’s an interesting bit of information. After analyzing a handful of successful startups, apparently, the perfect number of cofounders is 2.09. Others will argue that three is the perfect number. But it’s generally agreed upon that four is pushing it, and any more than that is just inviting chaos.

The reason is that a founding team should be as lean as possible. Two is good because it allows you to distribute the necessary workload and trust is high. Three allows for more diversity of skill and specialized roles but introduces more opportunities for unnecessary drama. Four means you can, theoretically, get even more work done, but trust is generally lower and politics come into play.

Any more than four means you have a committee, and you’re more likely to be focusing on power plays and egos rather than working together to build a great product.

But whether or not you choose to have a founding team of two, four, or eight, what really matters is the diversity of roles, experience, and responsibilities. Because if your cofounder is just a carbon-copy of yourself, then you’ve got a big storm coming.

The last thing you want your founding team to be is a collection of skills and abilities that don’t complement each other. At the end of the day, the size of your team is nowhere near as important as the qualities that each individual member brings.

The perfect founding team will have these three roles: the visionary, the hustler, and the hacker. Together these three make up the golden triangle, the foundation of every successful founding team.

Regardless of a team’s size, you need to fulfill these three roles if you want to succeed. Any other roles, while helpful, are unnecessary in the early stages. If you have someone on your team that isn’t fulfilling any of these following roles, then cut them—they’re not useful right now and will only slow you down. Remember you want to be as lean as possible.

Here’s a breakdown of each of these three roles and why you absolutely need them.

The Visionary

Often, but not always, the CEO, the visionary is the beating heart of the team. While everyone understands the overall goals and objectives, the visionary is the one with the stars in their eyes, the one who sees into the future. They have that unique ability to articulate that dream to others. To convince the skeptics among the customers, market, and investors, and inspire the rest of the team. Their job is, at all times, people-facing.

While not always the best at the detail-oriented stuff, the visionary is all about the big picture. Whether it’s coming up with the overall strategy, recruiting and hiring the best talent for the company, or making sure that the right people are kept happy. They have the responsibility of working on their business, not just in it.

Visionaries keep their eyes on the prize and are always looking to capitalize on even the smallest of opportunities.

They’re always looking to grow and expand the business, and are ready to adapt and pivot if the circumstances call for it. Even if it’s through sheer force of character, visionaries refuse to let setbacks hold them back, and barrel forward, rallying the rest of the team as they go.

It’s the visionary who organizes the rest of the team, and perhaps most importantly, inspires them.

The Hustler

If the visionary is the heart of the founding team, then the hustler is the arms and legs.

The hustler is simultaneously the doer and the taskmaster of the group, setting the pace and making damn sure everyone else keeps up. What they don’t know they’ll learn, and what can’t be efficiently done they’ll put in the hours to hammer it out. The hustler is not defined by position or title, but by attitude.

While hustlers can see and understand the bigger picture, instead they focus on the smaller scale of things.

All those detailed bits and pieces, the day-to-day operations that need to be done in order for the grand vision to happen. The visionary may set up the board, but it’s the hustler that moves the pieces.

A background in either marketing, technology , business development, or financials would be ideal. But the hustler ultimately walks the middle road, they’re the jack-of-all-trades competent enough to fill whatever role is necessary until a more suitable replacement can be found.

Bear in mind, that does not mean that the hustler is replaceable. In fact, finding someone with that right combination of driving force and willpower is rare in and of itself. Hustlers make sure that the visionaries and hackers stay grounded and working together. They keep their eyes on the bottom line and make sure the ship keeps driving forward.

There is only one thing that the hacker focuses on: product, product, product.

The brains of the operation, their entire job is to make sure that the required tech and hardware is up to scratch. If it’s a tech startup you’ll need an amazing programmer; if the business is a restaurant then you need an amazing chef; if you’re running a VC firm then you better have someone who knows the market.

Whatever your business is, you need someone who lives and breathes the product.

From the get-go, the hacker should be able to conceptualize what the design of the product should be like—what people should expect and why it’s amazing. From there, they need to have a problem-solver mentality and always be looking for different ways to develop and improve the value of whatever it is they’re working on.

In the early stages of a startup, the product is incredibly important, simply because without a product, there is no business. How well-made or valuable a product depends solely on the expertise of the hacker.

Make sure you choose your hacker carefully because the product starts and stops with them.

As you can see, each role is vitally important, and one cannot exist without the others. This demonstrates again why going solo is so difficult. It’s almost impossible for one person to fulfill all three roles effectively.

That said, while it is better to have one person dedicated to each role, it isn’t mandatory. For example, it isn’t uncommon to have founding teams of two where one cofounder has the dual responsibility of being the visionary and the hustler, or startup teams of four where the role of the hacker is shared by two people.

When it comes to figuring out your perfect founding team, Steve Blank recommends using the Business Model Canvas. It’s a simple tool that allows you to focus on the nine essential elements of a business model, all arranged to represent how they influence each other.

This surprisingly simple tool is all you need when it comes to finding the best founding team for your business.

First, the Key Activities box defines your product and how it’s delivered to your customer. Then compare that to your Key Resources, where you’ll list everything that’s needed in order to execute those activities. Don’t just list physical resources like money and infrastructure; be sure to note the expertise needed as well.

If there’s a massive gap between what you can bring to the table and the expertise needed to get your startup off the ground, then you need to start looking for a cofounder to fill the need.

Before you start picking up people left and right and asking them to share equity with you, be sure to take a good, hard look at your resources. Ask yourself whether or not you can get by with a consultant or a contractor.

A lot of founders run into this dilemma when it comes to expanding their teams. On one hand, you can get a cofounder who will stay with the company long term, but you’ll dilute your own equity. On the other hand, you could pay someone to do a specific job for you, and once the job’s done or the money runs out, they’re gone.

Some entrepreneurs don’t want to share equity with anyone, so end up breaking the bank with contractors in order to fill the holes in their expertise. One of two things usually happens—either they lose it all in the early stages, or when the business starts to scale they realize that the contractors were only there for the short term and that they really needed a dedicated person.

Other entrepreneurs might panic and immediately share equity with someone, only to discover that in the long run their cofounder’s skills aren’t needed anymore. So, what do you do?

The short answer is, if there is a key resource that is absolutely irreplaceable, not just at the early stage of the startup but throughout the entirety of your business, then get a cofounder. If there are skills that are ultimately replaceable, take a look at your budget and figure out what you’re willing to pay and for how long.

It’s a tough decision, but remember, a founding team needs to be lean. Take full use of the Business Model Canvas and get your bearings. Just remember to surround yourself with people smarter than you.

As any sports fan will tell you, even if your founding team is made up of first-round draft picks, there’s no guarantee that your team will succeed. After all, what makes a team great isn’t the individual talent of each member, but how well a team works together.

As talented as your team of founders may be, it won’t get very far unless it has these three essential qualities.

Trust and Respect

These two are the defining principles of any great relationship, let alone a great business relationship.

If you don’t trust or respect the person you’re working with, the one who you’ll likely be seeing day-in and day-out for as long as your startup exists, then that’s not a cofounder you need.

One thing startup founders hate with a passion is relinquishing control. Something many young entrepreneurs tend to do is micro-manage.

I’m sure we’ve all had that boss who somehow finds the nitpickiest of things to nitpick. It’s annoying as hell, and you get mad because it feels like they don’t trust you. That they don’t respect your skills enough to leave you alone to complete your task.

Build a culture of trust and respect by listening to each other, really learning how to value their opinion if it’s different from yours, and respect each other’s contributions to the team. It’s a two-way street, you can’t get if you don’t give.

If you’re in a startup team where everyone else is just the same as you, then congratulations! You’ve managed to multiply your weaknesses by the number of cofounders you have.

Make no mistake about it, diversity breeds success. Don’t make the mistake of creating a team that looks just like you. Talent is talent, but you’ll usually need to consciously seek out people who are different from you to make sure your team is well-rounded.

According to this study by the Journal of Business Strategy, there are three major ways in which cofounders can differ from each other: opinion, expertise, and power. The study concludes that winning teams are moderate in diversity of opinion, high in diversity of expertise, and low in diversity of power.

This means the perfect founding team consists of people willing to challenge and push each other, are not carbon copies of each other in terms of skills and experience, and all are treated equally.

Communication

The perfect founding team’s members are always talking to each other. It’s not enough that cofounders agree to communicate, but they actually follow through with it. Open communication is the single most important factor in creating a positive working atmosphere and culture.

However, communication is more than just simply talking to someone and assuming they’re listening. What you need is a proper conversation, where all parties feel like they’re being listened to, rather than just being talked at.

“The two words ‘information’ and ‘communication’ are often used interchangeably, but they signify quite different things. Information is given out; communication is getting through.” – Sydney Harris

You’ve probably heard this analogy before, but your relationship with a co-founder is a lot like a marriage. Why? Because you’re going to be dealing with that person day-in and day-out for as long as your startup exists. The stress and pressure will make you want to tear your hair out, and possibly each other’s throats. Sounds a lot like marriage doesn’t it?

A startup will take over your life, there’s no way around it. So the person you choose to have as your cofounder better be someone you’d consider a life partner.

Finding such a person can be a tricky business. Going back to the analogy of a startup as a marriage, then finding a cofounder is a lot like dating. Just replace the honeymoon period with late nights at the office screaming at your partner that their ideas are stupid.

For those looking for a cofounder, the best place to look is your professional network. People you’ve gone to school with or worked together with, maybe even someone at your co-working space. Someone who you know you can work with.

You can also look into working together with family or friends. This does offer an advantage because of your shared history and a higher level of trust. But you have to remember to prevent that personal relationship from getting in the way of your professional one, and not many people are good at that.

Of course, you can always create a founding team with a complete stranger. Not always a good thing, but can be if you manage to find the right person. Just don’t ask someone to be your cofounder if that person isn’t someone you’d hire to be your employee.

What qualities should I look for in a founding team?

Look for people that can balance out your strengths and weakness. But more importantly, look for a founding team with the same personal values and vision for your business. Skill sets come and go, but trust is critical to a successful founding team.

How many co-founders should I have?

We suggest three co-founders fitting three different aspects of leading a business—the visionary, the hustler, and the hacker. The visionary sets the macro view and planning of the business. The hustler is the implementer and personnel leader. And last, the hacker focuses on making the best possible product/service for the business.

What legal and financial considerations should I take into account when forming a founding team?

We suggest speaking with a legal professional to help write a contract with your founding team. In the agreement, you can outline revenue shares, equity, and responsibilities. No matter how much you like your founding team, having a legal document will protect you from future liabilities.

Keep Learning: Find a Business Partner Who’ll Help (Not Hurt) Your Business

Now It’s Time to Build Your Business

While the world might love the idea of a sole innovator, of some chosen one singlehandedly bringing about change, the reality couldn’t be further from the truth. You can’t become a leader if you have no one to lead.

While every startup team differs in size and shape, the three core roles of the visionary, the hustler, and the hacker remain the same with every successful startup. Chances are, you’re not going to be able to do it all, so do the smart thing and give the job to someone else. As an entrepreneur, you have to be working on the business, not in it.

Surround yourself with smart people and let them do their job while you do yours.

But the perfect team is only perfect because of the bonds that tie them together, not the qualities of each individual. Because a startup will do to a relationship what a dog does to a sock, find every opportunity to tear it apart. Choose a co-founder that complements you, and you know you can trust.

Now that you know how to build a founding team, get the skills to start and scale your business. Browse our selection of free courses for startups and small businesses.

About Jonathan Chan

Jonathan "JC" Chan is the first Content Crafter at Foundr Magazine. When not writing about anything and everything to do with startups, entrepreneurship, and marketing, JC can be found pretending to be the next MMA star at the gym. He has also contributed to outlets such as  Huffington Post ,  Social Media Examiner ,  MarketingProfs ,  Hubspot  and more. Make sure you  connect with him on LinkedIn !

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Nine reasons why you need a business plan

Building a great business plan helps you plan, strategize and succeed. Presented by Chase for Business .

Making the decision to create a new business is an exciting yet stressful experience. Starting a business involves many tasks and obstacles, so it’s important to focus before you take action. A solid business plan can provide direction, help you attract investors and ensure you maintain momentum.

No matter what industry you plan on going into, a business plan is the first step for any successful enterprise. Building your business plan helps you figure out where you want your business to go and identify the necessary steps to get you there. This is a key document for your company to both guide your actions and track your progress.

What is the purpose of a business plan?

Think of a business plan like a roadmap. It enables you to solve problems and make key business decisions, such as marketing and competitive analysis, customer and market analysis and logistics and operations plans.

It can also help you organize your thoughts and goals, as well as give you a better idea of how your company will work. Good planning is often the difference between success and failure.

Here are nine reasons your company needs a business plan.

1. Prove your idea is viable

Through the process of writing a business plan, you can assess whether your company will be successful. Understanding market dynamics, as well as competitors, will help determine if your idea is viable.

This is also the time to develop financial projections for your business plan, like estimated startup costs, a profit and loss forecast, a break-even analysis and a cash flow statement . By taking time to investigate the viability of your idea, you can build goals and strategies to support your path to success.

A proper business plan proves to all interested parties—including potential investors, customers, employees, partners and most importantly yourself — that you are serious about your business.

2. Set important goals

As a business owner, the bulk of your time will mostly likely be spent managing day-to-day tasks. As a result, it might be hard to find time after you launch your business to set goals and milestones. Writing a business plan allows you to lay out significant goals for yourself ahead of time for three or even five years down the road. Create both short- and long-term business goals. 

3. Reduce potential risks

Prevent your business from falling victim to unexpected dangers by researching before you break ground. A business plan opens your eyes to potential risks that your business could face. Don’t be afraid to ask yourself the hard questions that may need research and analysis to answer. This is also good practice in how your business would actually manage issues when they arise. Incorporate a contingency plan that identifies risks and how you would respond to them effectively.

The most common reasons businesses fail include:

• Lack of capital
• Lack of market impact or need
• Unresearched pricing (too high or low)
• Explosive growth that drains all your capital
• Stiff competition

Lack of capital is the most prevalent reason why businesses fail. To best alleviate this problem, take time to determine how your business will generate revenue. Build a comprehensive model to help mitigate future risks and long-term pain points. This can be turned into a tool to manage growth and expansion.

4. Secure investments

Whether you’re planning to apply for an SBA loan , build a relationship with angel investors or seek venture capital funding, you need more than just an elevator pitch to get funding. All credible investors will want to review your business plan. Although investors will focus on the financial aspects of the plan, they will also want to see if you’ve spent time researching your industry, developed a viable product or service and created a strong marketing strategy.

While building your business plan, think about how much raised capital you need to get your idea off the ground. Determine exactly how much funding you’ll need and what you will use it for. This is essential for raising and employing capital.

5. Allot resources and plan purchases

You will have many investments to make at the launch of your business, such as product and services development, new technology, hiring, operations, sales and marketing. Resource planning is an important part of your business plan. It gives you an idea of how much you’ll need to spend on resources and it ensures your business will manage those resources effectively.  

A business plan provides clarity about necessary assets and investment for each item. A good business plan can also determine when it is feasible to expand to a larger store or workspace.

In your plan, include research on new products and services, where you can buy reliable equipment and what technologies you may need. Allocate capital and plan how you’ll fund major purchases, such as with a Chase small business checking account or business credit card .

6. Build your team

From seasoned executives to skilled labor, a compelling business plan can help you attract top-tier talent, ideally inspiring management and employees long after hiring. Business plans include an overview of your executive team as well as the different roles you need filled immediately and further down the line.

Small businesses often employ specialized consultants, contractors and freelancers for individual tasks such as marketing, accounting and legal assistance. Sharing a business plan helps the larger team work collectively in the same direction. 

This will also come into play when you begin working with any new partners. As a new business, a potential partner may ask to see your business plan. Building partnerships takes time and money, and with a solid business plan you have the opportunity to attract and work with the type of partners your new business needs.

7. Share your vision 

When you start a business, it's easy to assume you'll be available to guide your team. A business plan helps your team and investors understand your vision for the company. Your plan will outline your goals and can help your team make decisions or take action on your behalf. Share your business plan with employees to align your full staff toward a collective goal or objective for the company.  Consider employee and stakeholder ownership as a compelling and motivating force. 

8. Develop a marketing strategy

A marketing strategy details how you will reach your customers and build brand awareness. The clearer your brand positioning is to investors, customers, partners and employees, the more successful your business will be.

Important questions to consider as you build your marketing strategy include:

• What industry segments are we pursuing?
• What is the value proposition of the products or services we plan to offer?
• Who are our customers?
• How will we retain our customers and keep them engaged with our products or services and marketing?
• What is our advertising budget?
• What price will we charge?
• What is the overall look and feel of our brand? What are our brand guidelines?
• Will we need to hire marketing experts to help us create our brand?
• Who are our competitors? What marketing strategies have worked (or not worked) for them?

With a thoughtful marketing strategy integrated into your business plan, your company goals are significantly more in reach.

9. Focus your energy

Your business plan determines which areas of your business to focus on while also avoiding possible distractions. It provides a roadmap for critical tradeoffs and resource allocation.

As a business owner, you will feel the urge to solve all of your internal and customers’ problems, but it is important to maintain focus. Keep your priorities at the top of your mind as you set off to build your company.

As a small business owner, writing a business plan should be one of your first priorities. Read our checklist for starting a business, and learn how to take your business from a plan to reality. When you’re ready to get started, talk with a Chase business banker to open a Chase business checking or savings account today.

For Informational/Educational Purposes Only: The views expressed in this article may differ from other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.

JPMorgan Chase Bank, N.A. Member FDIC. Equal Opportunity Lender, ©2023 JPMorgan Chase & Co

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