Business Formation and Christian Theology: Partnerships

A three-part Bible and Business series on what the Bible says about the legal formation of a business.

This post on partnerships will be abnormally long when compared to Sole Proprietors or Corporation. The reason for this is simple: many partnerships do not work well and seem to be the structure in which many ownership problems prevail. The harmony and trust the partners have at the beginning erode over time and are replaced with anger, frustration, distrust, or worse. Some partners end up becoming enemies, not friends.

I hope that the material presented in this section will help Christians in business who are contemplating a partnership as their business structure avoid the pitfalls of being in a poorly functioning partnership and enjoy the fruits and benefits of being in a well-run, productive partnership.

Other than a failing marriage, I cannot think of a worse relationship in which to be—a poorly functioning business partnership.

Business Characteristics of a Partnership

Partnerships are the most simple structure for two or more people to own a business together. In American law, there are two types of partnerships: Limited partnership (LP) and Limited Liability Partnership (LLP) (SBA, 2023:Online). Partnerships can be good for businesses with multiple owners and professional groups (like attorneys). Partnerships are created through a legally binding contract that outlines the responsibilities of each partner (Leonard and Bottorff, 2022:Online).

Limited partnerships have only one general partner with unlimited liability, and all other partners have limited liability. Limited liability partnerships give limited liability to every owner. An LLP protects each partner from debts against the partnership, they won’t be responsible for the actions of other partners (SBA 2023:Online). Table 3-3 outlines the pros and cons of a partnership.

Table 3-3: Pros and Cons of Partnership Business Type (Source: Adapted from Leonard and Bottorff, 2022:[Online] and Small Business Administration, 2023:[Online])

Pros	Cons
Low cost to form	Liability may or may not be limited
Little paperwork to create	Tax liabilities flow through to owners personally
Talent is pooled to support the business	Difficult to raise capital because there is no stock to sell
	Lenders are more hesitant to lend money without a more formal business structure

Stewardship Considerations of a Partnership

It is best to form a partnership with someone with a covenant relationship with God. But many partnerships are not clean, two-person entities where both know the Lord and are committed to the Lord. For example, consider a lawyer joining a law firm with over 600 lawyers, 200 of whom are partners. Or consider an accountant joining an accounting firm with thirty partners and 200 accountants. Being a partner in either of these situations is substantively different from being a partner with two others in an automobile repair shop or a manufacturing plant.

Some Christians hold to a bumper-sticker theology that is black and white: Christians should not be partners in business with unbelievers. Some will assert that 2 Corinthians 6:14-17 (The Holy Bible, 2011) precludes Christians from going into business with other Christians:

“Do not be unequally hoked with unbelievers. For what partnership has righteousness with lawlessness? Or what fellowship has light with darkness?” But, in this researcher’s opinion, it seems these Christians lack appreciation for nuance, which is what we find in this passage.

The phrase “unequally yoked (ἑτεροζυγοῦντες from ἑτεροζυγέω)” means to avoid becoming mismatched with someone through forming an intimate relationship or a close association that is both imbalanced and is difficult to exit. Paul combines two words into a hapax legomenon (a word used only once in a corpus) to communicate a nuance. This verb is difficult to render and literally means “other yoked.” Hence the translation “unequally yoked.” (Garland, 1999:331). Harris (2005:498-499) writes: “The verb ἑτεροζυγέω is not found elsewhere in biblical Greek nor in Greek literature before the Christian era. Literally it means “pull the yoke [ζυγός] in a different [ἕτερος] direction than one’s fellow,” and figuratively, “make a mismatched covenant,” “mismate”… In alluding to Lev. 19.19 and Deut. 22.10 by the use of the verb ἑτεροζυγέω, Paul is saying that just as the yoking together of animals of two disparate species to form a team will result in an incongruous mismatch, so close attachments and intimate association between believers and unbelievers will produce an ill-matched union and total dissonance.”

How far or tightly one applies this passage to business partnerships is a matter of conscious. But clearly, there must be a balance in how a Christian interacts with and owns businesses with others with different theological beliefs.

I find David Garland’s (1999:332) comments helpful at this point:

“The Corinthian Christians were surrounded by pagan values and practices. Just because they have been sealed by the Spirit does not mean that they can be careless about their relationships and associations with the world. Paul’s clarification in 1 Cor. 5:9–10 makes it clear, however, that he is not asking them to shun pagans altogether. He assumes that they will shop in the market (1 Cor. 10:25) and encourages them to go to dinner at a pagan’s home if they are invited and disposed to go (1 Cor. 10:26). But he does want to form their spiritual identity so that they are distinguished from the pagan society surrounding them and will realign their values accordingly. Christians hold values dear that others reject. They must not allow themselves to be hitched to the same yoke as those whose beliefs are hostile to the Christian faith. Therefore, Paul pleads with them to withdraw from these unholy alliances.”

Requiring a business partner to have similar theological beliefs may be preferred, but it is not necessary to have a healthy partnership. Those with theological differences might still make great business partners. Forming a business partnership is different from forming a new church or marriage. Instead, only a new business relationship is being formed. If done properly, the legal partnership will have legal ways to exit without undo personal harm. So, whether the entrepreneur is forming a

Partnership with one or more in a new venture,
Adding one or more partner(s) in an existing venture,
Joining as a new partner in an existing venture with one or more existing partner(s),
Entering into a long-term agreement with a customer or vendor who, in effect, acts as a business partner,

I do not believe someone can say, “If the other partners are not Christians, you cannot join that partnership.” I will suggest that the fewer the number of partners, the more important the alignment of values and perhaps theological beliefs will be.

Partnerships are contractual, not covenantal. This reality is due mainly to the time-limited nature of the relationship and the legal contract all partners should sign to create their professional relationship. There will be covenantal flavours to the legal relationship in that each partner has a duty of loyalty to the other partners, but I think it would be wrong to say that a business partnership is covenantal similar to our relationship with God.

Christians in business should consider several warning signs when considering joining an existing partnership or forming a new partnership:

If the partnership is producing a product or service that is sinful
If the partnership will cause one to sin
A partnership that makes it difficult to be faithful to God or makes it easy to break one’s covenant with God
A partnership that would keep one from pursuing one’s stewardship responsibilities or place limits on fulfilling God’s call
A partnership that funds activities inconsistent with biblical values
Partners who demand the business become the most important priority in one’s life.

Christians should be aware of these and other similar elements before joining a partnership. Christians should fully investigate the partnership agreement along with the partners before legally entering the partnership. Moreover, a core question for a Christian to consider before joining a partnership could be phrased this way: “Can your allegiance to God remain intact in the proposed partnership?”

Pragmatically, the answer to this question means:

Having a written, legally binding agreement with a clear and fair process to exit the partnership
Having partners and an agreement that will not hinder the Christian’s covenant relationship with God or keep the Christian from fulfilling the Christian’s stewardship responsibilities
Ensuring the products and services enable customers and their communities to flourish with no worry about sin being involved

Partnerships change over time because people change. The character and persona of one’s partners today will probably be different in the coming years, so the partnership agreement should have a way to gracefully exit with minimal damage to the exiting partner or the partnership itself.

This instruction accounts for the real fact that all partnerships end, some voluntarily and some through natural attrition. Exiting a partnership is not an implicit admission that the partnership or the individual partner has failed. But if the partners move in an incompatible direction, then there is a need for one or more partners to enjoy the protection of an agreement that provides a legal way out of the partnership. So, at the outset, the partnership should not be created if there is resistance to entering into a coherent, well-discussed, and well-written partner agreement that includes a clear exit process.

Stewardship Considerations for Family-Owned Businesses

Regardless of their legal structure, family-owned businesses function pragmatically as a partnership among the family members where the dysfunctions in the family unit carry over into the family business. In several family businesses with whom this researcher has consulted, it is common to find certain dysfunctions that represent poor stewardship practices of the business God has entrusted to the family. These common dysfunctions include role enmeshment, disregard for proper governance, directing others like an owner when one should behave like an employee, or acting like a son, daughter, mom, or dad when one should perform in the capacity of one’s employment within the company.

It is not uncommon for individual family members to hold all four roles and then combine the distinct authorities of each role into one while performing their day-to-day activities. For example, a son, who is a partial owner of the family business, is employed as the shop manager without spending authority and yet contacts the controller during the day to approve expenditures for his shop. This approval may be valid in the son’s role as a partial owner but is invalid in the son’s role as a shop manager. For the Christian family member who is both an owner and an employee, stewardship of their entrustment would mean the son stays in the son’s work role during the day and does not usurp other’s authority in the business to satisfy his lack of delayed gratification.

Family members rarely realise that when individual members usurp the authority given to employees or bypass normal business processes, these family members incrementally emasculate non-family employees. In addition, family members have the power to:

Create situations in which the chain of command is questioned or blurred.
Create “shadow” accountability roles for themselves, causing designated leaders to “look over their shoulder” when they make decisions.
Cause some employees to get two approvals: one from their manager and the other from the owner. Should conflicts arise between the owner and the manager regarding the approval, the employee may be left to determine which one will win and where to place their loyalties.
Hinder core processes that rely on cross-functional cooperation. When a family member appears unexpectedly and asks lots of questions before allowing a process to continue, the process is likely to grind to a halt. This work stoppage can cause anger and confusion in the employees. Some will “check out” and see how long they can last before finding a new employer.
Create conflict within the business’s ownership structure, which the family system’s dysfunctionality may negatively exacerbate.

During the day, family members who own businesses need to stay in their swim lane, performing the duties that they are assigned within the authority of their position would normally enjoy. They should not step outside their role during the day and get involved in other duties, roles, responsibilities and/or decisions. Doing so rarely leads to positive outcomes.

The indirect biblical support for family members staying in their work role during work hours is found in Ecclesiastes 3, where Solomon said: “There is a time for everything, and a season for every activity under the heavens: a time to be born and a time to die, a time to plant and a time to uproot, a time to kill and a time to heal, a time to tear down and a time to build, a time to weep and a time to laugh, a time to mourn and a time to dance, a time to scatter stones and a time to gather them, a time to embrace and a time to refrain from embracing, a time to search and a time to give up, a time to keep and a time to throw away, a time to tear and a time to mend, a time to be silent and a time to speak, a time to love and a time to hate, a time for war and a time for peace” (The Holy Bible, 2011: Ecclesiastes 3:1-8).

There is a time for family members to fulfil different roles; they need to be clear about these roles and be able to shift between roles transparently.

Other Personal Characteristics of a Potential Partner a Christian Should Consider Before Entering a Partnership

The personal character qualities of one’s partner are immensely important. This researcher has developed the following discussion of personal qualities through observation and experience. Christians entering a new business partnership should pay attention to this discussion.

The first quality to consider is commonly termed “character.” In the Bible, character usually describes a person’s moral and ethical features (Faithlife, 2023:Online [character]). In Christian theology, the twin theologies of original integrity (also termed original righteousness) and original sin directly impact understanding and assessing a person’s character.

When Adam sinned (Genesis 3:1-7), his sin resulted in the loss of original integrity, which is defined to be the perfect conformity to the law of God by man as he was first created (Cairns, 2002:317). Adam’s sin fundamentally changed his character in that his morality and ethics became depraved, which means he lost his original integrity and became inherently corrupted (Psalm 51:5, 58:3) (Terry, 1907:84).

Adam affected us all through Adam’s sin. Romans 5:12 (The Holy Bible, 2011) says this:

“Therefore, just as sin entered the world through one man, and death through sin, and in this way death came to all people, because all sinned.”

Adam’s loss of original righteousness was passed on to mankind through heredity at birth and negatively affected humanity’s nature (Valentine, 1906:420-421). As a result, every person has a depraved character at birth.

But God has made a path to redeem and heal humanity’s depraved nature. Romans 5:17-18 says,

“For if, because of one man’s trespass, death reigned through that one man, much more will those who receive the abundance of grace and the free gift of righteousness reign in life through the one man Jesus Christ. Therefore, as one trespass led to condemnation for all men, so one act of righteousness leads to justification and life for all men.”

The contrast between Adam and Christ is clear in these verses (and in the larger section of Romans 5:12-21). Paul stresses the superiority of grace to sin and Christ to Adam. The “abundance of grace” means that grace more than undoes the depraving effects of sin and is something that is undeserved by humanity (“free gift”) (Barrett, 1991:108).

Applying this discussion to business partnerships is important. Partners with a depraved character that the Holy Spirit has not regenerated will present more difficulties in relations and work habits than those who have been regenerated. This researcher has argued elsewhere in this dissertation that other partners are not required by Scripture to be Christians for a Christian to enter a partnership (See 3.4.2.3, “Stewardship Considerations of a Partnership). However, this brief discussion on the depravity of our characters adds emphasis to the notion of partnerships not lasting long or performing well if the grace of God has not undone the effects of sin in the partners’ characters. So, as this researcher suggested earlier, while Scripture does not require that one’s partners are Christians, it is highly suggested that this be the case.

In addition, when assessing the character of a potential partner, one should look for an individual who has completed a class or two in what is commonly termed “the school of hard knocks.” Good character is produced by endurance, which is produced through suffering: “We rejoice in our sufferings, knowing that suffering produces endurance, and endurance produces character, and character produces hope, and hope does not put us to shame” (The Holy Bible, 2016: Romans 3-5). By discussing their past business and personal experiences and observing their character and work product in the present, the Christian business owner can learn the substance of another’s character, both faults and strengths. The Christian should look for whether the other’s character has matured through difficult experiences or whether the other’s experiences have produced negative results, such as bitterness, cynicism, fear, or some other immaturity.

The core of another’s character will often reveal itself only when stressful situations occur. The Hogan Assessments, which are leadership assessments often used in corporate America to assess future leadership capabilities, describe this phenomenon as the “dark side” of personality. “When the pressure is on, the line between strength and weakness is not always clear—drive becomes ruthless ambition, and attention to detail becomes micromanaging. The dark side of personality derails careers and companies…the more time we spend under pressure, the less able we are to manage our behavior, and, eventually, our dark sides emerge. Dark-side personality describes a group of characteristics that can be strengths under normal circumstances, but…can become reputation-ruining interpersonal flaws. Even though they only tend to show up in times of increased stress or pressure, they can be extremely damaging to your reputation. These dark side tendencies erode trust, loyalty, and enthusiasm, and are of particular concern in relation to leadership roles.”

Being a partner in a business partnership is inherently a leadership position. Each partner’s opinions, thoughts, or ideas carry more weight than an employee of the partnership. Undeveloped or immature characters can wreak havoc on the partnership and the business when stressful times come to the partnership. While these individuals may be highly talented and be wonderful to work with 95% of the time, when a partner’s dark side appears during stressful times, their 5% negative words and actions can outweigh the 95% positive work product and interactions.

Hence, a person considering joining an existing partnership or contemplating forming a new one should assess the potential partner’s character over time and observe the partner(s) under stress. The quality and maturity of another’s character can not be assessed until sufficient time has been consumed focusing on the other’s character. This exploratory relationship work is essential to building a healthy partnership. Nothing can replace the test of time as business professionals consider taking on a partner or forming a new business with a new partner.

Communication is a second consideration for the Christian business owner. What is in view here is not only the partner’s ability to communicate a message well but also the content of the message because the content of the message reveals what is in the other’s heart.

Three Scriptural passages come to mind when discussing communication. One is Ephesians 4:29 (The Holy Bible, 2011): “Do not let any unwholesome talk come out of your mouths, but only what is helpful for building others up according to their needs, that it may benefit those who listen.” In order to have a good partnership, it is best if the partners keep their speech clean and encouraging. Clean speech is usually more difficult than coarse speech because the former requires a more broad command of linguistics.

In addition, offering encouraging words is usually helpful in building unity and strength in relationships. Businesses benefit when communication is encouraging instead of being discouraging or uncivil.

Incivility, which is rude, unsociable, or impolite speech (Dictionary.com, 2023:Online), causes significant damage to a business. Consider these realities of the effects of incivility in a business (Pearson and Porath, 2009:31):

Fifty-three per cent of employees surveyed lost work time worrying about an uncivil incident and future interactions with the offender.
Twenty-eight per cent lost work time trying to avoid the offender.
Thirty-seven per cent reported a weakened sense of commitment to their organisation.
Twenty-two per cent reduced their efforts at work.
Ten per cent decreased the time they spent at work.
Forty-six per cent thought about changing jobs.
Twelve per cent changed jobs.

A person should consider the effects of incivility on business and employment relationships before joining a partnership where one or more partners can be uncivil or rude in their business interactions.

A second passage is Colossians 4:6 (The Holy Bible, 2016):

“Let your speech always be gracious, seasoned with salt, so that you may know how you ought to answer each person.”

In my opinion, when compared to Ephesians 4:29, the focus of Colossians 4:6 is one of mature speech where the message itself is appropriate to the situation.

Finally, Matthew 12:34 (The Holy Bible:1984) reveals much about communication: “For out of the overflow of the heart, the mouth speaks.” Here, the emphasis is that the message reflects what is in the individual’s heart who is speaking. A person does not become good from resolutions, such as “I shall be good.”—but from being—that which is in a person’s internal reservoirs: “Doing comes from being, fruit from roots, speech from hearts” (Bruner, 1987:464). If a person wants to know what is in another’s heart—beliefs, values, emotions, conclusions, attitudes, and so forth—listen well to what that individual says. The speech of any individual reflects what is in that person’s heart.

A third quality to which a business owner should give attention is culture. Here, Niebuhr’s (1951) discussion about how Christ intersects with culture at large can be down-stepped into a business culture. The possibilities which Niebuhr lays out are as follows:

Christ Against Culture
Christ of Culture
Christ Above Culture
Christ and Culture in Paradox
Christ the Transformer of Culture

Next on the list of qualities to look for is compensation, which is a value given in payment for one’s labour (Faithlife, 2023:Online [compensation]). This researcher is not simply referring to a salary or bonuses. The subject of compensation must include the joys of sharing in the profits and the risks of sharing in the losses. A true partner is financially able and willing to shoulder the financial risk of the business, not just share in the company’s profits.

It is unrealistic to think that a business will never experience a financial loss or need to be right-sized to be positioned for growth. “Every company—no matter how great—faces difficult times…They all have ups and downs” (Collins, 2001:213). In addition, business cycles happen—and they cannot be stopped or avoided by the business owner (Knoop, 2004:15-20). Every organism is born, lives for a while, and then dies. Every organisation has a beginning and an end. In these lifecycles, besides growth, there is always a downturn—a time when the organisation constricts and, if not managed properly, will eventually die. During the downturn, the goal of management is to recognise the challenge in front of them and manage the organisation into the next phase of growth. Their goal is to minimise the downturn but not avoid it. Instead, the downturn is captured as an opportunity to reset the organisation for the next growth phase. (Adizes, 1988:2-10).

When (not if) there is a downturn in the business, the chances are good that financial losses will occur if the partners do not properly right-size the business. When there is a loss, someone must pay for that loss. One of the undeniable truths of business is that someone always pays for a loss, especially when the business becomes bankrupt. Perhaps society bears the loss; perhaps it is a bank or investors, but someone always pays for a loss.

The best partners can pay for a loss. Good partners can weather financial storms when (not if) the business has a downturn. If a partner can share in the risks, then the partner should share in the profits. The opposite is also true: if a partner cannot or will not share in the risks, then that partner should not share in the profits.

One last element to look for in a partner is competence, which is the ability to perform at a level that can achieve a goal or accomplish a task (Faithlife, 2023:Online [Ability]). Each partner should be good at what the partner does and have a right to expect the other partners to be good at what those partners do, too. Cloud (2006:4-5) writes: “People who become leaders, or really successful, tend to have three qualities. Number one, they have some set of competencies. In other words, they know their field, their industry, their discipline, or whatever. If you are Bill Gates, it helps to know something about the computer industry. If you are going to be a leading surgeon, you have to know what you are doing. In other words, you can only fake it for so long, boys. So, get yourself in the library or wherever and master your craft. Get good at what you do…You just have to get good at what you do, period. There are no shortcuts.”

Now, competence alone does not guarantee success in one’s role as a partner. There are plenty of competent people who would make lousy partners. Therefore, the other partner characteristics need to be balanced with competence. And no matter what the other’s competence is, if it can be outsourced to a third party, then it is likely not the right skill set to look for in a new partner.

Bill English, Publisher
Bible and Business

Sources:

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