Kome and Pat went to the same primary school and after the first few days of squabbles, theybecame friends. This friendship took them through Secondary School, University and theNational Youth Service Corps (NYSC) programme.
Kome got a job with a Multi-National Company shortly after his NYSC but Pat was not so lucky. For the next 3 years, Kome would support his friend in little ways while he was still searching for a job. Pat came up with some business ideas but could not get the required funding so he approached Kome for assistance. Kome had some money saved which he was hoping to invest in the importation of goods to augment his monthly income.
When Kome heard Pat’s idea, he decided to invest in that instead. He considered it a better bet given that Pat was a friend he trusted. Over drinks, they discussed the modalities of the business in an atmosphere charged with excitement and it was decided that both of them would have equal partnership, since the idea was Pat’s and the funds was from Kome. The deal was sealed with a handshake. Money changed hands and Pat implemented the business plans as agreed.
The business has been going strong for sometime and Kome has not received any return on his investment. At first, Pat said the business was not making profit and Kome waited but when the business started making profit, Pat changed his lifestyle – new car, bigger office, better living arrangements etc but not a kobo to Kome.
Long story short, Kome got the police involved but he cannot even recover the savings he invested in the business because it’s his word against Pat’s and Pat is boldly denying that they had a business relationship. He is actually using money from the business to frustrate the case.
All Kome can say is “I never thought it would end like this.”
In Nigeria, people are wary of getting into business with others because of the uncertainties, deceit and greed in the society. People are duped by relatives, friends and colleagues whom they dared engage in business dealings with. The business starts with smiles and lots of promises but almost always end in sorrow and disappointment.
There is nothing wrong in getting into business with another person, but as you pursue that business relationship, please consider the following:
Clear definition of terms:
One of the greatest problems with making assumptions is that it makes an “ass” of the person making the assumption. Please do not make any assumption where money is concerned! State and restate the terms of engagement to avoid misinterpretation.
Once both parties are fine with the terms, it is imperative that they be written down. Gone are the days when gentlemen’s agreements stand. It may seem rosy today but for the sake of your peace of mind, prepare for eventualities. Let the agreement specify what you are both putting into the business and what you are to get in return from the business. Let the terms be clear and enforceable.
Record of all investments:
Keep a record of your investment into the business and where possible, collect acknowledgement of payment which specifies what the payment is for.
Get at least one person to act as your witness to the agreement. This could also act as a deterrent to a would-be fraudster because other people are now in the know.
Open a business account together and make sure that you are a signatory to the account. Let the bank know the limits either of you can approve individually and the amount of money that requires both signatories.
Putting all these in place will be futile if you do not keep an eye on the business. Develop a system for monitoring business performance. Keep track of changes in the business and ask questions when things do not seem clear. Even if you have another job on the side, endeavor to visit your business at least once a week; that way, you can keep abreast of what is happening and make changes when required.
Having these in place may not stop fraud if you are dealing with a very dubious person, but it will give you a solid platform for defense should things go wrong. Worse case scenario, you will at least be able to recover what you invested.