How to Deal with An Unreliable Cofounder

You may have drawn up plenty of written agreements when you and your partner decided to found a small business. In the end, all business partnerships prosper because of trust and not legal documents. While it may be easy for some people to act enthusiastic about a new business idea in the beginning, not everybody is cut out for the long marathon of true entrepreneurship.

Five steps to take when your small business cofounder is unreliable

During the course of many business startups, partnerships have struggled and even dissolved because one founder is more committed than the other. If you’ve partnered up with an unreliable cofounder, you might consider taking these steps to get your small business back on track.

  1. Start managing your co-manager

You would probably rather spend your time managing your company and not your cofounder. On the other hand, your co-owner may not lack will or passion but instead lack organizational skills. You two might just need to hammer out your different responsibilities and how you both will be held accountable to them.

At this point, you may want to keep from hurting your partner’s feelings. You could tactfully suggest implementing a new workflow app for the company. Tell your partner that you two will be the first testers of this software for the business. Use that opportunity to agree on tasks and deadlines. It’s possible that the right workflow application could help make you more productive as well. It will certainly give you both a way to document your expectations for each other.

  1. Dispute arbitration

In the best case, you have already documented some procedure that you and your cofounder agreed upon in case of any disputes. If you can’t resolve the issue between yourselves, you might consult with a third-party arbitrator who has experience in smoothing over these sorts of difficulties.

It’s possible that this outside party will come up with ways that both of you can apply your strengths and deal with your weaknesses. If you can resolve issues amicably, it’s likely to be a lot cheaper and better for your small business.

  1. Buy your partner out 

If your small business cofounder refuses to acknowledge a problem, you may be able to resolve the problem by simply buying out that partner’s interest in the company. You get to retain control of the company. Your ex-partner gets to leave with some cash.

In many cases, this solves the problem because the unreliable cofounder realized that he or she was not that interested in running a company after all. If you’re still in the process of setting up a new company, you might document this sort of exit strategy inside the documents just in case the partnership doesn’t work out. You may have to take out a small business loan to fund the deal; however, it could be worth it if you can free yourself from a partner who doesn’t pull his or her weight.

  1. Get a lawyer

Sadly, your cofounder may not view the situation the same way that you do. Perhaps he or she doesn’t want to give up a share in a good business idea. It’s even possible that the partner thinks that you are making unreasonable demands. In some cases, your cofounder may not want to leave the business out of pride.

Getting legal help is an option of last resort because it will probably cost more and, of course, because it can cause hard feelings. Still, this is what you might have to do if you are caught between the demands of your growing company and an unreliable partner.

  1. Sell out

Of course, you do have one more option. You can always choose to let your partner buy you out, end your relationship, and go your own way. If you cannot get your partner to change, lack the money to buy out the small business and would rather not pursue legal action, this might be your only choice.

You might feel as if it’s unfair. Why should you have to be the one to exit when your cofounder has been the unreliable one? On the other hand, you also have to ask yourself if you want to face the same frustrations over the course of many years. You could pocket your cash and start over without the burden of an unreliable cofounder that hampers your next small business.

It’s easier to avoid unreliable cofounders in the first place

Certainly, you’re better off if you can carefully checkout your potential partners before you trust them with your livelihood. These are some ways you can avoid an unreliable partner before you ever found your small business:

  • If you don’t know this individual well, you might start researching with a simple Google search of the person’s name. You could add a search term like “complaints” or even “lawsuits” after the person’s name.
  • You may also talk to people they have worked with in the past. Either ask for references or check them out on LinkedIn, the B2B social networking site.
  • You should also speak with your prospective partner to make sure you share some similar goals and ideals. Business partnerships can be a lot like marriages. While you can iron out some differences, large differences might only get magnified under the stress of running a new business.

In any case, your business cofounder is too important to your success to leave it all to chance. You’re better off working alone than working with a poor partner. If you need a cofounder, choose that person carefully and be sure to have a strategy to resolve disputes in place.


Leave a Reply