I think alexander makes makes many good points.
#1 reason for numerous businesses I have seen fail is not attending to the business. Leaving someone else in charge and 100% trusting that they will do fine.
I live in SE Asia and one of the biggest complaints of expatriates who start businesses in this part of the world is how someone local "cheated" them out of their business. BUT - in almost all cases - they left someone they didn't really know very well in charge of a valuable business and didn't attend to the business, sometimes for months and months on end. They often paid local people a pittance and then gave them access to and asked them to manage large cash flows. I don't care where you are, that is asking for a problem.
But - the bottom line - is/was - if you have a business, you need to attend to it. How hard would be to review a monthly P&L or even a weekly P&L substantiated by photocopies/scans of accounts - if need be? If you see things start going down the drain, you intervene. But the key is that you have to pay attention at least a little bit to catch the problem before it actually ruins your business.
Same issues apply whether it is family or a friend running a business. I personally think that if you allow either to operate your business - you have to FIRST make a decision about the possibility of ruining that relationship. At least if you want to keep the business alive. I lost what I considered to be my best friend one time - based on a partnership that went sour. Another partnership with a different friend worked out great. And - as alexander mentions - BOTH situations taught me a lot about the character and quality of those individual friends. The guy things worked out well with - is still a first rate quality friend - over 25 years later.
A general illustration of the point: I once loaned an immediate family member what was for me at the time - a large sum of money. BUT - I didn't want to ruin our relationship for anything of any value. So I told them to pay the money into an account that I didn't monitor. I didn't even want to know either way. It was family. If I made the loan, I made the loan and said goodbye to the money. If the money came back - all the better. I believe the money came back - but to be honest I still don't know for sure, probably 15 years later. I don't want to know.
Do the same with a business. If you give it to friend or family to operate, be prepared to give it away and forgive and forget it.
But the bottom line is - don't.
