Entrepreneurial Couples Law and Legal Definition

If farming is considered a business, and all farms have a definite business aspect, then the reality of couples working together in a business goes back to colonial times. In colloquial speech, as well, the phrase "mom-and-pop" is commonly used to indicate a small business enterprise. In effect the couple in business is the most common form of a family business. The phrase "entrepreneurial couple" appears to have arisen initially in sociological and other academic studies but has become the standard way of referring to the "mom-and-pop" without the slightly denigrating connotations of that latter phrase.

Statistical reporting by the U.S. Census Bureau does not provide precise data on the prevalence of entrepreneurial couples, but data on business ownership—collected predominantly to track women-owned and minority owned businesses—provide a close-to-accurate estimate. Data from the 2002 economic census (the most recent available) show that in that year 2.7 million businesses were owned equally by women and men; these had $731.4 billion in receipts.

The Census data, based on ownership, may very well understate the full extent of the phenomenon—if not that of the "entrepreneurial couple" then of the "couple working together in a business." The Census Bureau reported 14 million sole-proprietorships without employees. In a very large number of these wives and husbands work together, the wife providing administrative services and handling appointments and orders, the husband, a craftsman or a professional, providing the actual "labor."

TYPES OF OPERATION

While the term "entrepreneurial couple" suggests on the one hand a couple running a little store together (hence the mom-and-pop label) and on the other a couple owning and running a substantial business together with several or many employees, the range of operations is extremely diverse with each member of the couple taking variable roles.

One useful categorization was offered by a leading expert on the subject, Kathy Marschack. distinguished three distinct and basic types of operations in her book, Entrepreneurial Couples. She calls the first type the solo entrepreneur with a supportive spouse. In this arrangement the supporting role may be held either by the man or the woman, and the support provided may extend from emotional backing to more practical day-to-day involvement. The distinguishing feature is that only one member of the couple carries the entrepreneurial load. The second type Marschack offers is the dual entrepreneurial couple. In this type of arrangement, both members of a couple run different businesses of their own and provide each other support. Here both are highly entrepreneurial but separately—yet their common interest in enterprise provides an additional bond. The third type Marschack labels copreneurial, combining the words "couple" and "entrepreneur." In this type the couple articipate in the business as full partners and share all responsibilities equally.

ISSUES

Couples considering launching a business together might be well advised to read one or several books available on the subject—including Marschack's. Others include Couples at Work by E. W. James, Married in Business by Jack and Elaine Wyman, In Business and In Love by Chuck and April Jones, and others. Preparation is key because the combination of marriage and business while on the one hand potential very fruitful can also have unusual problems and down-sides. Some of the factors are briefly highlighted here.

  1. Both partners need to bring significant value to the business—experience, talent, or skill. Spouses unable to make meaningful contributions in one or more areas of a business may take on a supportive but should avoid an operational role in that company to avoid later regret. Here the issue is finding the right role suitable to the different temperaments of the couple involved. An outgoing personality should not be keeping the books; the loner should not be in sales, etc. Normally the right role for each partner will be obvious to the couple based on their married life. Ideally, partners in a couple-owned business will have separate, complementary skills. When partners handle different responsibilities of the business, it tends to minimize disagreements over day-to-day matters and creates an environment in which both partners are able to exercise some autonomy and develop respect for the talents that the other brings to the enterprise.
  2. Ideally partners will not be competitive with one another or avoid situations in which such competitiveness will create friction. Successful couple-owned business partners are willing to accept blame for business problems rather than simply point fingers at one another.
  3. Newlyweds should exercise caution before partnering up for business—for the obvious reason that they may not know each other well enough yet to burden the marriage with a brand new set of problems.
  4. Good communications are essential. Experts note that the keys to good communication in dialogue with a spouse are the same as they would be for any other business partner—listening, focusing on the issue at hand, not taking criticism personally, etc.—and that entrepreneurial couples have to recognize that business disagreements have nothing to do with their love relationship.
  5. Adaptiveness to changing roles is valuable. The man may be accustomed to calling shots in business—while the woman is accustomed to running the household her way. In the business one or the other may have to assume an unaccustomed role. These matters need early discussion and continuing review—one reason why couples who "talk together" will fare well—see point 4 above.
  6. Work life and home life must be separated. Many entrepreneurial couples warn that it is easy for husband-wife and other romantically involved business partnerships to lose sight of the personal side of the relationship in a flurry of business issues. In such cases, the romantic spark that first drew the partners together can be snuffed out by payroll concerns, worries about the landlord, proposed regulatory changes, and a plethora of other issues that are always swirling outside the doors of small business enterprises. Entrepreneurial couples can take several steps to curb this threat. Some couples agree to never discuss work at home or in bed; others actively seek out non-work activities that they can do together. Yet other couples, meanwhile, agree to have one or the other take time away from the business, so that both partners can take a step back, regain their perspective, and rekindle their personal relationship. This is particularly important in instances where children are involved.
  7. Privacy set-asides. Since entrepreneurial couples spend enormous amounts of time together, successful husband-wife teams agree that one of the keys to their success is their decision to set aside solo time for each partner. Even if the solo activity (community work, a class, a sport league) is only one evening a week, this time can do a lot to recharge the partnership batteries of both people.
  8. Let reason rule. Couples need objectively to assess whether they can work together well in a business. They may make a great couple precisely because they complement each other—but the business may require a different kind of match.

WHEN THE BUSINESS/MARRIAGE FAILS

A special problem of the couple-owned business is failure of the business—or of the marriage. Either one can, and often does, cause the failure or loss of the other. In a divorce settlement, for example, the business may have to be sold because one of the partners insists on a cash settlement. The loss of a business may cause such stresses that the marriage also fails. Legal precautions even for these unfortunately eventualities have been devised. As Dan Erdel reported in Farm Journal on the evolution of so-called antenuptial ("after marriage") agreements, contracts intended to distribute property jointly owned by a couple in the event the marriage ends in death or divorce. Erdel wrote: "The typical antenuptial agreement addresses the following issues: 1) how much of the deceased spouse's property, if any, is the surviving spouse to receive; 2) if the marriage dissolves, how is the property to be divided between the parties; and 3) how is the property that is accumulated during the marriage to be divided upon death or dissolution of the marriage?" Erdel points out that an antenuptial agreement "is not a romantic subject." True. Some entrepreneurial couples, however, may find that such an agreement may be appropriate to safeguard children—possibly from earlier marriage(s)—the business, and each of the partners.

BIBLIOGRAPHY

"A Family Business with Customers at Its Heart." Farmers Weekly. 24 February 2006.

Castle, Ken. "Dodge Ridge, California: A mom-and-pop mountain keeps skiers happy with a relaxed vibe and good old-fashioned home cooking." Ski. 2 March 2006.

Baltes, Sharon. "Brothers Open Coffeehouse." Business Record. 27 February 2006.

Blackburn, Vanessa. "Two Heads Really Are Better than One: Local couples make business and marriage work as paired partners selling local real estate." Bellingham Business Journal. March 2004.

Erdel, Dan. "Family Business." Farm Journal. 21 February 2006.

Jandebeur, Robert. "Change in Family: Industry Sampler: In Tulsa, reacting to the change from 'Mom & Pop' to bizav." Airport Business. February 2006.

Marschack, Kathy J. "Entrepreneurial Couples: Making It Work at Work and at Home." Davies-Black Publisher. 1998.

"Power Couples." Florida Trend. November 2004.

Reynolds, Gail. "The Pleasures and Pitfalls for a Homestead Business." Countryside & Small Stock Journal. November-December 2005.

Starr, Jennie. "What Would You Do if You Received a 'Cease and Desist' Letter?" Searcher. March 2006.

"Taking the Pulse of Family Business." Business Week Online. 13 February 2006.

U.S. Census Bureau. Press Release. "Women-Owned Businesses Grew at Twice the National Average, Census Bureau Reports." 26 January 2006.

                            Hillstrom, Northern Lights

                             updated by Magee, ECDI