BUSINESS PARTNERSHIP WITH RELATIVES OR FRIENDS: 8 Crucial Steps
Forming a business partnership with friends or relatives can be incredibly rewarding because you trust that they will be reliable and trustworthy. I have seen a few cases of great partnership between brothers and among friends. However, it can also be risky and have far-reaching negative effects if not handled with care. Emotional bonds can blur judgment, so it’s vital from the onset to set clear boundaries and adopt a structured approach. Below is an easy-to-follow plan to help you build and maintain a successful business partnership with friends or relatives.
- Evaluate Compatibility before Committing to the Partnership
Just because you’re close personally doesn’t mean you’ll be great business partners. Start by assessing whether your personalities, work ethics, and goals align:
Shared Vision: Do you both envision the same future for the business? Are you in agreement about staff strength, welfare and engagement? What are the conversations about funding and use of funds?
Work Style: Is one person relaxed while the other is intense?
Risk Tolerance: Does one prefer steady income while the other embraces financial risk?
Skills and Strengths: Do your skills complement each other in true benefit of the business?
Ask tough questions:
“What happens if we lose money?”
“Are you willing to work nights or weekends?”
“Can we fire each other if necessary with no ensuing malice?”
This early honesty can save the relationship and the business.
- Create a Formal Partnership Agreement
Even if it feels awkward, a written agreement is non-negotiable. This document serves as your roadmap when disagreements arise and should be drafted with legal help.
Include:
Ownership Structure: Clearly define who owns what percentage.
Roles and Responsibilities: Write out each person’s duties.
Capital Contributions: Note who is investing money, equipment, or time.
Decision-Making Process: Will decisions be unanimous or majority rule? On whose table does the buck stop? If there is a disagreement on procedure, who should take the final decision?
Profit Sharing: How will profits (and losses) be split?
Conflict Resolution: Specify how you’ll resolve disputes—mediation, arbitration, or court?
Exit Strategy: What happens if a partner wants to leave, dies, or becomes incapacitated?
A well-written agreement protects everyone and preserves the relationship.
- Set Clear Boundaries between Business and Personal Life
Blurred lines between personal and professional lives often cause emotional conflict. Protect your relationship with these boundaries:
Schedule Business Time: Designate specific times for business discussions.
Separate Finances: Maintain individual bank accounts and credit lines outside the business.
Neutral Communication: Use business email and project management tools to separate personal and work dialogue.
Respect Personal Time: Avoid talking about work during holidays, family dinners, or personal events.
The goal is to keep business issues from bleeding into your friendship or family dynamic.
- Communicate Openly and Regularly
Poor communication is a leading cause of failed partnerships. Set a tone of open, honest dialogue from the start:
Weekly Check-ins: Have regular meetings to discuss progress, problems and plans.
Transparency: Always share financials, decisions, and major developments.
Constructive Feedback: Be honest but kind when giving feedback. Focus on behavior, not personality.
Active Listening: Don’t interrupt or dismiss your partner’s concerns. This will break down any form of partnership.
Make it a habit to check in emotionally, too: “How are you feeling about the business lately?” “Are we where you expected us to be at this time?” “What ideas do you have that you think we should survey for the next big step in the organizational growth?”
Keeping communication healthy will keep your partnership healthy.
- Maintain Financial Transparency
Money often causes tension, so handle finances with care:
Use Accounting Software: Keep accurate, real-time financial records.
Hire an Independent Accountant: Avoid accusations of mismanagement.
Require Dual Approval: Major expenses should need the partners’ sign-off.
Set Salaries and Reinvestment Policies: Don’t assume profits will be split evenly every month. Define what gets reinvested into the business and what is withdrawn.
Financial transparency builds trust and minimizes conflict.
- Respect Roles
Trust your partner/partners to do their job. Micromanaging or overstepping can breed resentment. Once roles are defined:
Give Each Other Autonomy: Allow space to lead in your respective areas.
Support, Don’t Control: Offer help, but don’t take over.
Honor Decisions: If you agreed that one partner manages suppliers, let them make those decisions.
Mutual respect ensures smooth operation and a healthier partnership.
- Plan for Growth and Challenges Together
Your business won’t stay the same forever. Plan for:
Scaling: How will you hire, expand locations, or add products?
Role Changes: Will you rotate responsibilities or promote staff into leadership roles?
Succession Planning: Who takes over if one of you steps back?
Anticipating the future — both good and bad — keeps you aligned and prepared.
- Have an Exit Plan
Even successful partnerships can end. Plan for graceful exits:
Buy/Sell Agreement: Set conditions under which one partner can buy out the other.
Valuation Method: Agree on how the business will be valued during a buyout.
Notice Periods: Decide how much time a partner must give before leaving the business. Sometimes it is helpful to put a forfeiture penalty on jumping ship for no appreciable reason. If possible and necessary, reasons that may be acceptable for leaving the organisation in a hurry or unceremoniously, may be specified.
Non-Compete Clause: Prevent partner/partners from starting a competing business immediately after leaving.
Having an exit plan doesn’t mean you expect failure; it ensures stability if unexpected changes occur.
Keep the Relationship First
Business is temporary; your friendship or family relationship is (hopefully) forever. Keep respect, honesty, and communication at the center of everything you do. By putting the right structures and boundaries in place, you can build not only a thriving business but also preserve and deepen the bond that made the partnership possible in the first place.
Goodluck!!
Fatherhood with Ibe
THE MAN WHO WAITED TOO LONG
When the call came, I was sitting out at the balcony of the top floor of my house, just relaxing and having a moment with my thoughts. I ignored the call initially because the number was not registered on my phone but when the caller persisted, disturbing my peace, I picked the call with a frown.The voice on the other end trembled.
“Good evening Dr. Thank you for picking up. It is Mrs. Bamidele, Julius’ mother.”
I hadn’t heard from her in years but I remembered how excited she was decades ago when I took her son Julius under my wings at Lagos Law School. I had seen so much potential in the young man and had tried to show him possibilities available to him post his studies. He must have talked about me to his mum; one day he came carrying a shopping bag which he said was from his mum. Julius wouldn’t take no for an answer, he claimed his mum would be heartbroken if I rejected her gift. Reluctantly, I took the parcel. It was a beautifully sewn and embroidered ‘agbada.’ It wasn’t my style but I resolved that for the obvious excellent craftsmanship and Mrs. Bamidele’s good intentions, I would wear it one day.
The day came sooner than I expected – Mrs. Bamidele’s 50th birthday celebration.
I wore the agbada for the event and she was so happy to see me, anyone would think I donated a million dollars to her. She told me over and over that my influence over her son was a huge answer to her prayers. She told me about Julius’ previous lackadaisical attitude to education.
“Do you know that he sat at home lazing around for a year before agreeing to attend Law School? And he is very brilliant as you may know. Then suddenly, I see him putting in effort because of you and the influence you have on him.” She went on and on thanking me. It was almost becoming embarrassing.
After that event, Mrs. Bamidele would sometimes call me just to reiterate her gratitude, but I hadn’t heard from her in a long while. Even Julius had been quite distant and I had too much on my plate to seek him out.
“Mrs. Bamidele!” I called, my voice was warm from the memory of my short association with she and her son. “It’s good to hear from you. How are you doing?”
“I am sorry to bother you,” she said. “I don’t know who else to call. I’m tired, Dr.”Her voice, usually strong and peppered with Yoruba proverbs, carried the kind of worry only a mother could feel.
“It’s Julius,” she said.
Of course, it was Julius, I thought.
“He’s sold another idea again. Says he’s moving on to something else. He sounds excited, but I know it’s the beginning of another cycle. On top of all those, he is still single and has no plans to settle down. I beg you, please talk to him. You’re the only one he ever listens to.”
I sighed. Julius was 55 now. I’d mentored him even after Law school —brilliant boy. He could sell snow to an Eskimo, charm birds from trees. He was tall, articulate and blessed with striking looks. Back in Law School, he’d captivate an entire seminar room with a single idea. But even then, I noticed something. He never stayed with any idea or subject long enough to conclude things. He could come up with a crazy idea and back it up with valid points but just when you think that the theory is worth researching, Julius would have moved unto something else.
After the call with his mother,I went in search of Julius.
I found him in his Lekki flat, lounging on a cream leather sofa, barefoot, with jazz music playing softly in the background. He looked relaxed, as if life wasn’t slowly passing him by.
“Sir!” He beamed, standing up excitedly to welcome me. I accepted the hug but didn’t smile.
I sat looked around.
“Another business closed shop?” I asked.
He shifted his gaze and shrugged.
“It wasn’t the right time. You know how markets shift. I’ve got something better in mind though—real estate tech this time. It’s bound to be a winner.”
I stared at him for a moment. I saw the same light I’d seen several times in his eyes – same fire… but fire with no furnace. He’d had tens of these “better” ideas in the last thirty years. It was the same procedure; start strong, generate heat, lose steam, disappear.
“What happened to the logistics platform?” I asked. It was the last ‘winner’ he was working on the last time we’d seen. He looked at me as if totally clueless about what I was talking about. Then understanding dawned and he laughed self-consciously.
“Ah that!” He waved. “Too many moving parts. The guys I brought in didn’t share the vision. You know how people are.”
I nodded.
“And Ifeoma?” I asked. He’d introduced the girl to me as someone he wanted to marry.
His brow furrowed.
“That was years ago, Uncle. We just weren’t aligned.”
“She wanted to marry you.” I said.
He looked away.
“She loved you, Julius. She supported your dreams even when there was nothing on ground. But you kept waiting. What exactly are you waiting for?”
He was quiet for a while.
“I want it to feel right,” he said at last. “The business, the woman, the timing.”
I leaned forward. “Julius, life is not a restaurant where everything arrives well-plated. Sometimes you eat with your hands, sometimes you eat standing. But you eat. Your problem is that you’re always waiting for the perfect table.”
He chuckled, but there was no humour in it.
“I guess I just don’t want to fail.”
“You think you haven’t?” I asked, gently. “My young man, you’ve failed many times. It was never because your ideas were bad, you are too clever for that. You failed because you didn’t stay long enough to succeed.”
He blinked.
“Let me tell you something my own mentor told me,” I continued. “Discipline is loving your dreams even on the days they don’t love you back.”
He looked down.
“You keep mistaking the high of starting for the joy of finishing. You love beginnings. But life is built in the boring middle. The grind, the discipline, that’s where the magic happens.”
He nodded slowly, his fingers tapping his knee.
“And love?” I pressed. “You think the perfect woman will come fully formed, with no needs, no flaws, no demands? She won’t. She’s not magic. She’s human. And you, my young man, are running out of time.”
He exhaled deeply.
“I don’t know if I can change, Sir.”
“You don’t have to change in a day. Just choose one thing—one business, one woman, one goal … and stay. Stay through the doubt, the discomfort, the fear. That’s all.”
He sat back. The jazz music had stopped. Outside, the Lagos sun had begun to fade into soft amber.
“You are right, Sir. I think I’m tired of running,” he whispered.
“Good,” I smiled. “That means you’re ready to embrace life.”
And for the first time in years, I saw in Julius not just a man full of ideas, but perhaps, finally, a man willing to build.