When founding a company what measures can you take to prevent disputes with your co-founders?

I agree - written agreements are key. But a critical factor in crafting a good agreement is clear discussion between all founders on two key questions: What will we do when things go wrong and what will we do when things go right? Clear conversations around the answers to how you will handle setbacks, defeats or disagreements, and how you will handle growth and success, will naturally lead you into conversations about attitudes and motives that you might not otherwise have. A successful conversation around those two questions will help you craft a suitable agreement. A difficult conversation may prevent you from getting involved with an unsuitable partner.

Don't have co-founders - seriously. I once read that you should never have an even number of partners and never 3 or more.

No matter how good your planning and agreement, at some point you will diverge. So have employees or co-owners with less than 50% and be sure you have a rock solid agreement on how you are able to buy them out in the future.

The 'Lone Ranger' syndrome aside, my experience is that children (read repressed adolescents or almost adults) do not have the kinds of adult conversations that lead to commodious relationships among founders. I have been called in to 'rearrange' understandings for a number of companies. My approach follows a fairly ordered set of steps. First, I gauge the emotional maturity of the founders. If they are immature and/or tend to avoid adult conversations, I generally recommend that the company be sunsetted and the children be allowed to grow up. Most problems among founders arise from this situation. Unable to face the adult conversations the juniors as I call them finesse the issues and kick the can down the road. By the time the problems become unavoidable, it is most often too late. Once I get to dealing with the adults - about one in four or five of the companies that I am called in to help with falls into this category - I look at the granularity of the understandings reached. Many problems arise because of one of two errors. The first is that a founder has been allowed to 'contend' the ability to make a certain contribution without being pressed to demonstrate that the contention is reliable - that they can deliver. The second is that the understandings were stunted - they did not go far enough into the serious matters. The foundation for a log cabin will not support a twelve story building. A collateral issue is the lack of agreed upon metrics to measure contributions and performance. I encounter situations regularly where ownership is fixed at the beginning rather than adjusted based on results - or where a provision for an arbitrator has not been adequately made. Most often this arbitration should be done by a fully functioning and independent board of directors. (BTW, aversion to the existence of a fully functioning and independent board should always be taken as a sure sign of radical immaturity) Finally, I find situations where agreements may have been reached but not reduced to writing. The old maxim 'a verbal agreement is not worth the paper it is printed on' is a good guide. So here are my suggested rules:

1. Never take an emotionally immature partner as a founder
2. Always have the adult conversations and insist that they be thoroughgoing
3. Remember the essential role that performance metrics play - nobody should get a free ride
4. Always provide for adult supervision in the form of a board of directors
5. Written agreements are essential to well-based understandings

When starting any business venture that involves others it is important to ensure that there is a shared vision of what the enterprise is going to look like, what products/services it will be centered around, what markets it will serve and who owns what percentages.

Additionally, agreeing on governance is critical. Who is in charge, who is going to perform what functions and how will disputes be resolved. Once these basics are understood and agreed upon, the most important step is to PUT IT IN WRITING.

Eventually there will be conflicts and disputes and having binding, written agreements will serve everyone well.

In the passion of creation, many people naively believe that there will never be any major disagreements -- they are wrong. Protect everyone involved by having binding agreements.

Try to get some understanding of how the enterprise is valued. Please also think to address issues of voluntary separation, involuntary separation, death, disability, divorce, and more.

Think about how the exit process will function in your operating and shareholder agreements.

Having up front agreements on org design, roles and decision making authority can help. Even if there are only two people, you want to assign roles, responsibilities and accountabilities in teh 10 or twelve organizational boxes (Chief executive, operations, finance, accounting, marketing, sales, administrative, tax, collections, HR, Benefits, Etc).

It bears repeating: Write down everything at the beginning. Take nothing for granted. All that seems innocuous when your friends will be ignored when the knives come out. Prepare for that possibility now.

I have a co-founder in my company. So, what measures can I take to prevent disputes with my co-founder? This question is for me much like a question before marriage - what should I do to prevent fighting with my wife? Of course, if you write down everything at the beginning it is a good idea, but it will only make things more clear and it will not prevent disputes. To really avoid them one have to think of it as a marriage - work on yourself, your communication, ability to listen and to produce win-win situations all the time.

The short answer is that you can't avoid disputes. They will occur and the challenge will be to resolve them before they do damage to the company. In your case, there are danger signs embedded in the way you preface your question. "I have a co-founder in my company." The statement indicates a dismissive attitude. In your mind, your co-founder is a lodger in your house. If you think of it as 'your company', you have probably lost already. I work with many entrepreneurs and would-be entrepreneurs. Two of the things that define the latter are a heavy ego involvement and a sense of entitlement. No amount of 'writing down' overcomes the psychological weaknesses of immaturity.