Problems Of Partnership Business
(A Case Study Of Esco & Co Warri Delta State)
Partnership businesses, while offering advantages like shared decision-making and resource pooling, encounter several challenges. Communication breakdowns can arise when partners have differing visions or fail to establish clear roles and responsibilities. Disputes over profit distribution, capital contributions, or decision-making authority can strain relationships. Additionally, partnerships are vulnerable to the financial liabilities of each partner, risking personal assets in case of business debts or legal issues. Succession planning can be complex, especially in the event of partner retirement or departure, potentially leading to instability or dissolution. Furthermore, without proper legal agreements, issues related to governance, dissolution procedures, or admission of new partners may escalate. These challenges underscore the importance of thorough planning, communication, and legal documentation in partnership ventures.
This research is aimed at identifying the problems of partnership business in Nigeria and how to sole some of them. This as an attempt to present the frame work which will help various group of persons in partnership businesses and others desiring to become one to have a clear understand of some the problem they are to encounter in the business, especially those of them who are in a haste to form one without understanding the terms of the business neither having any form of agreement. Worthy to mention is the funding which constitute a lot of problems, lack of good planning and good management techniques not being applied which often militate against the progress of the partnership business.
In terms of organization this work is divided into five chapters enumerated as follows.
Chapter two: deals with the subject matter under review with reference to books of other authors, published journals, magazine of different opinion.
Chapter three: Discuss the methods of research the researcher embarked upon with the various instruments used in carry out the wok.
Chapter four forms the core of this research. Data’s collected were presented, analysed and interpreted and the hypothesis tested.
Summary of the findings, implications, conclusion and recommendations.
A list of bibliography and an appendix are provided at the end of this chapter for further classification and information on this study.
Title page i
Approval ii
Dedication iii
Acknowledgment iv
Abstract v
Table of content vii
CHAPTER ONE
1.0 Introduction1
1.1 Statement of problems2
1.2 Aims and objectives 6
1.3 Significance of the study 7
1.4 Statement of the hypothesis 8
1.5 Scope and limitation of the study 9
1.6 Definition of terms 11
CHAPTER TWO
2.0 Literature review 12
2.1 General nature of partnership business 16
2.2 Historical views of partnership business 17
2.3 Definition of partnership18
2.4 Types of partners 19
2.5 Banking of partners 20
2.6 Kinds of partnership 23
2.7 Applicable laws of partnership in Nigeria 26
2.8 Special characteristics of partnership business 28
2.9 Formation and operation of partnership 29
2.10 Formation procedures 29
2.11 Partnership deed 31
2.12 Power and liabilities of partners 33
2.13 Advantages and disadvantages of partnership 35
2.14 Limitation to partners’ liabilities 36
2.15 Dissolution and winding up of partnership 37
2.16 Conclusion 42
CHAPTER THREE
3.0 Researcher meteorology and design 43
3.1 Introduction 43
3.2 Research design 43
3.3 Data collection instrument 44
3.4 Primary data sources 44
3.5 Secondary data sources 46
3.6 Population description 46
3.7 Method of analysis 47
CHAPTER FOUR
4.0 Presentation and Analysis of data 48
4.1 Data analysis 48
4.2 Presentation and interpretation of data
4.3 Test of hypothesis
CHAPTER FIVE
5.0 Summary, Findings, conclusion and recommendation
5.1 Findings
5.2 Conclusion
5.3 Recommendations
Bibliography
Appendix
INTRODUCTION
Long ago, many committed Nigerians have engage them self in one or two business entity to enhance economic growth. They engage them self in various sector of the economy to earn a living.
From past analysis and experience in this present economy has shown that many of these business organizations are not living up to expectation. In view of these it is hoped that a research analysis of the problems and prospect of business will be uncovered and causes of their poor performance. Orientation differs, ones the word ‘business” is pronounce, the message that rings in the mind of men especially in Nigeria is buying and selling of goods. But business is broader than that. Business can be defined as any activity one engage himself or herself with lawfully to earn a living, for the pu7rpopse of this research, I want to consider business as “every profit directed economic and commercial activities that provides goods and services necessary to a nation standard of living.
Business ownership can be classified into two namely: public enterprise and private enterprise.
Private enterprise comprises of sole proprietor ship, co-operative society partnership and limited company.
In this research we are going to concentrate mainly on issue concerning “partnership business”. According to Boron, Donan (1976) Partnership was defined as a business relationship between two or more persons who jointly own and manage a business. The maximum number is usually put at twenty people.
People find it easier to engage in sole proprietor ship and others to avoid certain problems that may arise in partnership business such as
– delay in decision making
– crisis of confidence
– chained activities of all new members to old ones.
1.2 STATEMENT OF PROBLEM
A larger proportion of the business entities in this country are faced with similar problems. These problems hinder the growth and development of partnership business in this country, thereby limiting their enormous contribution towards the nation economic development. Some of these problems are listed below.
1. Poor finding sources
2. lack of feasibility study
3. lack of lay down rules
4. inability to differentiate between personal and business affairs.
5. negligence on part of some partners.
6. taking decision without comparative analysis and good understanding of national economic trend.
7. lack of competitive awareness
8. lack of personal assessment on strength and weakness of the business.
PROBLEMS OF PARTNERSHIP BUSINESS
1) POOR FUNDING SOURCES: The major sources of partnership business fund is form the little savings of the owners and friend which is inadequate to service the capital out lay of the business hence they fail within the shorted period.
2) LACK FEASIBILITY STUDY: Handly business survives the test of time without feasibility study why because of the poor capital base and ignorance.
3) LACK OF LAY DOWN RULES: Most of the partnership businesses do not have any laid down rule that is guiding the business and most of the time terms of business are not defined which usually end up in quarreling and winding up.
4) INABILITY TO DIFFERENTIATE BETWEEN BUSINESS AND PERSONAL AFFAIR: This usually constitute a lot of problems in partnership in terms of management where some of the mix up will take the business property like a personal property.
5) NEGLIGENCE ON PART OF SOME PARTNERS: Most of the partners because of their numerous engagements easily show a non chalant attitude toward their defined responsibility.
6) TAKING DECISION WITHOUT COMPARATIVE ANALYSIS AND GOOD UNDERSTANDING OF NATIONAL ECONOMIC TREND: This has made many investors to wind up in the sense that government decision stands final to every other decision that have been in existence.
7) LACK OF COMPETITIVE AWARENESS: Most partnership business in Nigeria does not take into account the possible reactions of competitors, such as serve price cuts or special discount to retailers.
8) LACK OF PERSONAL STRENGTH AND WEAKNESS ASSESSMENT IN BUSINESS: Many in partnership do not assess their weakness and strengths in business hence they experience failure.
In summary many of the partnership business set up are without any formal training in this area, as result of this the business usually fold up after some time lack of technology and other operational problems confronting their growth. They like wise ignore the accounting procedure of the big business; hence they end up in having poor accounting records. Also on few occasion you can see a partnership business that carried out a feasibility study to know how possible and viable the proposed business would be before embarking on it.
In this study the researcher intends dealing with these problems
1. Common problem facing partnership business in the area of planning, finance and management.
2. The causes of these problems
3. How to solve these problems
4. The future prospect of partnership business in Nigeria
1.2 AIMS OF OBJECTIVES
In this work, the researcher intends to find out or investigate the following things in view of the problems listed above.
1. Whether partnership business carry out feasibility study or not before embarking on any business.
2. Whether most of the partnership business uses deed.
3. Whether they keep proper accounting record
4. If partnership business owners plan their work
5. Whether there is any effect poor capital base or inadequate capital has on partnership management.
6. Where mismanagement of fund affect the management of partnership.
The researcher in the course of the writing has tried to study and understand the problems and how they have frustrated the effort of partnership business owners and some possible suggestion to elicit them and recommendation on how to handle some of the problem
1.3 SIGNIFICANCE OF THE STUDY
In this work, the researcher intends to go into details and find out the problems facing partnership business in Nigeria. The researcher in interested in identifying the major problems that hinders them from a worthy growth in business. There are choice area of focus specified in the objectives of this study because many feel committed to economic growth of the nation, as such involves themselves in one business activity or the other in the various sector of the economy.
From series of analysis, there is a clear indication that many of the partnership business set up in Nigeria are not living up to expectation. It is hoped that a careful research analysis of these problems and prospect of partnership will uncover the causes of poor performance, and suggestion that could be of relevant help to be profile for handling some of the confronting situations.
1.4 STATEMENT OF HYPOTHESIS
Hypotheses are research answers to problem which are in assonance guesses that are subjective to some test. From this assertion the research deemed it necessary to state out the following hypothesis.
a. Using the null hypothesis
Hi: For the positive
Ho: For the negative
Hi: Inability of some partnership business to differentiate their personal and business affair is a problem to partnership business in Nigeria.
Ho: Inability of some partnership business to differentiate their personal and business affair is not a problem to partnership business in Nigeria.
b. Hi: ESCO & Co has been experiencing problems in fast decision taking.
Ho: ESCO & Co has not been experiencing problems in fast decision taking.
c. Hi: Business capital is at times raised through borrowing.
Ho: Business capital is not at times raised through borrowing.
d. Hi: Business in partnership has some trace of negligence.
Ho: Business in partnership has not a trace of negligence.
e. Hi: Partnership business has been embarking on feasibility study.
Ho: partnership business has not been embarking on feasibility study.
1.5 SCOPE AND LIMITATION OF THE STUDY
The topic of this research is on partnership business it is assumed that it cannot be applied to larger firms. Its focus is on problems identification on why and how the listed factors have hindered the growth of partnership business in Nigeria.
The writer couldn’t go far because of inadequate time as a student and poor financial base; it was not possible to get all information needed because of lack of time and cooperation on the part of the point of my case study.
LIMITATION OF TIME
The time schedule for the research work was the time when the researcher is supposed to be reading for his examination and making preparation.
FINANCIAL CONSTRAINT
The researcher being a student could not meet the financial obligation needed for adequate visit to several part of the country where useful information would have come from. For this reason the work was limited to some areas.
LACK OF RELEVANT DATA
Due to the nature of Nigeria government being instable, many workers were on strike at most of the time when their offices were visited they were at home on strike and considering financial involvement most after two subsequent visit of such failure were not repeated again.
ATTITUDE OF INTERVIEWS
Many interviews have this problem of non challant attitude of none co-operating and ignorance, some interviews ignore appoint scheduled with them, this crumbles the effort of the researcher.
1.6 DEFINITION OF TERMS
1. PARTNERSHIP BUSINESS: A business consignment carried out between two or more person who jointly own and manage a business.
2. SIGNIFICANCE: Importance of the work being done at particular time to the users.
3. HYPOTHESIS: Suggestions put forward as a starting point for reasoning or explanation.
4. CONSTRAINTS: Hindrance or limitation to the progress of the work.
5. Revenant: things that are related to the issue at hand or important solution to the work at hand.
6. INTERVIEWS: A formerly arranged meeting to get the opinion of persons, coy or group by the party called interviewer.
7. FEASIBILITY STUDY: Study carried out to find out facts about a particular business or project of its profitability.
Problems Of Partnership Business:
Partnership businesses offer several advantages, including shared responsibilities and resources, but they also come with their fair share of challenges and problems. Some common problems associated with partnership businesses include:
- Disagreements and Conflict: Partnerships involve shared decision-making, which can lead to conflicts and disagreements among partners. Differences in opinions on business strategies, financial decisions, or even personal issues can strain the partnership.
- Unequal Contributions: Partners may not always contribute equally in terms of capital, time, or effort. This can lead to feelings of inequality and resentment among partners, especially if one partner feels they are carrying a disproportionate burden.
- Financial Issues: Financial problems can arise if the business is not profitable, or if partners do not agree on how profits should be distributed or reinvested in the business. Disputes over salaries, bonuses, and dividends can also lead to financial strain.
- Liability: In a general partnership, each partner is personally liable for the business’s debts and legal obligations. This means that if the business incurs debts or faces legal issues, the personal assets of the partners may be at risk.
- Lack of Continuity: Partnerships can be vulnerable to disruptions caused by the death, retirement, or withdrawal of a partner. Without a clear partnership agreement or succession plan, these events can jeopardize the business’s continuity.
- Difficulty in Decision-Making: Partnerships require consensus-based decision-making, which can slow down the decision-making process. In some cases, partners may struggle to reach agreements on important matters, leading to delays in business operations.
- Sharing of Profits and Losses: Partnerships typically involve sharing both profits and losses. If the business faces financial losses, partners may be required to contribute additional funds to cover these losses, which can strain personal finances.
- Lack of Capital: Limited access to capital can be a problem for partnerships, especially if partners are unable or unwilling to invest additional funds. This can hinder the business’s growth and expansion opportunities.
- Conflict of Interest: Partners may have conflicting personal interests or pursue side businesses that compete with the partnership. This can lead to ethical dilemmas and undermine trust among partners.
- Exit Strategies: Developing a clear exit strategy can be challenging in a partnership. What happens if one partner wants to leave the business or sell their share? Without a predefined plan, these situations can lead to disputes and uncertainty.
- Tax Complexity: Partnerships are subject to complex tax regulations, including pass-through taxation, which can be confusing and burdensome to manage. Partners may also have different tax obligations based on their individual circumstances.
- Lack of Specialization: In some partnerships, there may be a lack of specialized skills or expertise needed to address specific business challenges or opportunities, which can hinder the business’s ability to compete effectively.
To mitigate these problems, it’s crucial for partners to have a well-drafted partnership agreement that outlines the roles, responsibilities, and decision-making processes, as well as procedures for resolving disputes and addressing changes in the partnership. Regular communication, trust-building, and a shared commitment to the success of the business are also essential in maintaining a healthy partnership. Additionally, seeking legal and financial advice when forming a partnership can help partners navigate potential challenges more effectively.