Business Partnerships With Church Members

When I recently visited an area in Queens that used to be called Koreatown, I was surprised to find that most of the businesses there are now owned by non-Koreans. A resident explained that other Asians in the area pooled their financial resources, bought buildings and leased them to their compatriots, so the Koreans there had to move elsewhere.

Megasized shops and franchises are the trend of the future, and it will become harder for small businesses to survive. Small business owners must form partnerships with others and pool their resources to start bigger businesses or at least buy merchandise in bulk at a lower price.

Some of our church members have formed business partnerships for this reason, but the results have not been encouraging. More often than not, they’ve ended their partnerships and folded their businesses. Personal relationships have soured as well.

The primary reason for these unsuccessful partnerships is false expectations. They become partners with hidden expectations, and when things don’t turn out the way they expect, they feel betrayed and end their partnerships. I have encouraged partners to be explicit about their expectations by writing formal contracts when entering a partnership, but few have. They seem to think of church members as family members, which makes them uncomfortable drawing up formal business contracts.

But if you want to remain friends and continue to be members of the same church, you must have written contracts when entering business partnerships. If you feel uncomfortable drawing a formal contract, you must at least put in writing what you will do in each of the following extreme cases:

First, you must list each other’s expected responsibilities and duties when your business does very well. When a business flourishes, one partner tends to feel that he does all the work while his partner takes his money doing nothing. Managers and manufacturers frequently feel this way towards their investors and marketers. So they break up the partnership. When you enter a partnership, each party must have clear expectations about each other’s responsibilities, how to divide profit, and how much will be reinvested in the business.

Second, you must indicate what each partner will do when the business goes bad: when it loses money, if you decide to sell the business, or – in the worst case – if you decide to file for bankruptcy. Otherwise you may end up pointing fingers at each other and accuse the other of backstabbing.

As Christians, we are far from actually being Christ-like. We are merely in the process of becoming like him. When we are placed in difficult situations, our carnal nature shows up. When you clarify your hidden expectations by drawing up contracts, it helps mitigate against our human weaknesses and gives your business partnerships a better chance of success.