Setting Boundaries Is a Key to Family Business Success

Posted on May 1, 1998 by Tom Mazza, staff writer

It is a simple, timeless ritual that occurs every day in millions of households. Husband, wife, and sometimes children finish working and then return home. They spend time sharing their daily experiences with each other. A difficult client or an annoying co-worker are briefly discussed over dinner and then normal family activities resume.

What happens when husband and wife are co-workers and the struggles and problems of a small business are brought home each evening? An even more difficult situation occurs when the business like a small limousine service, operates from the home. Where is home and where is the workplace? When are family members treated as co-workers and when are family issues front and center?

About 90 percent of the 6.5 million businesses in the United States were family businesses in 1994. More than 27 million family members work in these businesses, according to government studies. Fewer than 15 percent of them survive beyond the third generation for a variety of reasons.

A family business has a profound impact on marriage and the overall strength of inter-family relationships. TL Hill is director of the Family Business Alliance (FBA) at Temple University in Philadelphia, PA. The FBA is funded by Temple, corporate donations, and contributions from member companies. This organization provides a variety of services to family businesses, including advice and support, both in business and in strengthening family relationships.

“Initially, the biggest problem we see is that working in a family business can cause a loss of the rejuvenating power of a family,” says Hill. “That small window of discussion, when a family reviews their day with each other, restores and refreshes family members. The loss of this and the continuation of work problems and tensions can damage a family.”

Dr. Moss Jackson, a psychologist who works with the FBA, says establishing clear boundaries within the home is important.

“When a husband and wife work together, they should go to a specific area of their home and discuss work issues for a set time period,” says Jackson. “Maybe, you go to the kitchen and discuss the work day for 15 to 30 minutes. Then table the discussion until the following day.”

According to Jackson, when the business is conducted in the home, the problem becomes more acute. “In that case, making a specific area, like the bedroom, a ‘work-free’ zone may be helpful,” he says.


One of the keys for a successful family business is a clear plan for the business and defined roles for each family member. Jackson suggests the following plan:

  • Complete your past with family members: If there have been past problems with your spouse, starting a family business will not solve them. “This is similar to the misguided married couple who think having a baby will strengthen the union,” says Jackson. “A couple with major problems is not helping themselves by working in a business together. If the business is based on a partnership, it can work. However, if it’s a continuation of a power struggle within the family, it will be a disaster.”

Similarly, a father and son who have had conflicts over the years need some closure before going into business together. “They need to acknowledge where they have been and look forward to where they are going,” continues Jackson. “They need to talk honestly to each other. Also, it’s important that the father treat his son like a business partner, not an irresponsible teenager,”

The older generation must respect the education and experience of the younger generation. It has become a fact that the younger generation is much more comfortable with computer technology. The older generation of a family business may feel awkward in allowing younger family members to educate them. “If your son is your partner, he must be treated as an equal,” says Jackson. “His knowledge and experience must be valued and respected.”

  • Design a clear road map for the business: Determine where the business is and where you want it to be in the future. Hiring an outside advisor or talking with a non-family member will facilitate a more candid environment among family members.

The non-family advisor can hold regular meetings to determine exactly where the business is in relation to stated goals. Even a small business can benefit from an outside board of directors. The board can hold periodic meetings and help plan the company’s future.

Discussions will often become emotional between family members, which is counter-productive in a business setting. “An outside party can help you recognize that conflict is inevitable, and he or she will help you focus on solutions,” says Jackson. “People who care about each other have to respect and acknowledge each other and agree that disagreements are inevitable.”

  • Define work roles and responsibilities for each family member: “One of the nice things about gender differences is that the husband and wife will complement each other perfectly in a family business,” says Jackson. “The wife can observe what’s happening with customers. Women understand subtle human characteristics.”

In order to succeed, one partner must respect the turf of the other and allow him or her to make decisions freely. Family members must have the authority to make decisions without controlling other family members.

Jackson says it’s important that a couple’s value system is similar. “If the husband is a win-at-all-costs businessman who does not care who he treads on, and his wife believes honesty and fairness are essential, then it is not a good idea to be in business together,” he says.

  • Handle conflict and disagreements appropriately: It is vital to de-personalize an area of disagreement. For example, “The night dispatcher you hired stinks. How could you make such a mistake hiring that man?” This is the wrong way to criticize your spouse.

A more appropriate criticism might be, “In the past 60 days, we have had seven service failures due to dispatch mistakes on the 11 p.m. to 7 a.m. shift. This number is about three times our normal ratio. Let’s re-evaluate the hiring criteria for the night dispatch position so we make better hiring decisions in the future.”

Another good method of addressing family business conflict is to allow your customers to be heard. Survey your clients on all aspects of your business. “More than 18 percent of the clients we surveyed said they have a problem getting through on our toll-free telephone line. This indicates to me that we need to add a second incoming toll-free line.” According to Jackson, this allows the focus of the discussion to rest with increased customer service, not who is right and who is wrong.

The most important element for family business success is never to lose focus on the fact that “family” must come before “business.”

“I had a young man tell me the biggest thing he dislikes about being in business with his father is just shooting the breeze about cars with him,” says Jackson. “Every discussion comes back to the business in some way. That young man believes something is missing from a potentially powerful relationship. That is very sad.”



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