THE PROBLEMS OF PARTNERSHIP BUSINESS IN NIGERIA

(A CASE STUDY OF ESCO & CO WARRI DELTA STATE)

By

EDAFETEMU

Presented To

Department of Accountancy

ABSTRACT

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.

TABLE OF CONTENT

Title page i

Approval ii

Dedication iii

Acknowledgment iv

Abstract v

Table of content vii

CHAPTER ONE

10 Introduction1

11 Statement of problems2

12 Aims and objectives 6

13 Significance of the study 7

14 Statement of the hypothesis 8

15 Scope and limitation of the study 9

16 Definition of terms 11

CHAPTER TWO

20 Literature review 12

21 General nature of partnership business 16

22 Historical views of partnership business 17

23 Definition of partnership18

24 Types of partners 19

25 Banking of partners 20

26 Kinds of partnership 23

27 Applicable laws of partnership in Nigeria 26

28 Special characteristics of partnership business 28

29 Formation and operation of partnership 29

210 Formation procedures 29

211 Partnership deed 31

212 Power and liabilities of partners 33

213 Advantages and disadvantages of partnership 35

214 Limitation to partners' liabilities 36

215 Dissolution and winding up of partnership 37

216 Conclusion 42

CHAPTER THREE

30 Researcher meteorology and design 43

31 Introduction 43

32 Research design 43

33 Data collection instrument 44

34 Primary data sources 44

35 Secondary data sources 46

36 Population description 46

37 Method of analysis 47

CHAPTER FOUR

40 Presentation and Analysis of data 48

41 Data analysis 48

42 Presentation and interpretation of data

43 Test of hypothesis

CHAPTER FIVE

50 Summary, Findings, conclusion and recommendation

51 Findings

52 Conclusion

53 Recommendations

Bibliography

Appendix

CHAPTER ONE

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

12 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

12 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

13 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

14 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

15 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

16 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

FEASIBILITY STUDY: Study carried out to find out facts about a particular business or project of its profitability