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Is Your Generosity Hurting Your Bottom Line?

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When you own a small business, family and friends often expect free services -- a luxury you may not be able to offer, especially in this economy. Learning to set limits without hurting anyone's feelings will keep your loved ones happy and protect your bottom line.

"When you rely on family and friends to support and promote your business, you've got to be careful not to set up a culture where everyone thinks everything is on the house," says Rachel Sussman, a relationship therapist in New York City. "This is a business, not a hobby."

Instead, you want to make family and friends feel appreciated by offering them perks that are within reasonable limits. "You can be generous without having it impact your business," Sussman says.

Related: How to Get Your Loved Ones to Love Your Business

Here are three tips for setting limits with your friends and family when they expect freebies.

1. Set boundaries at the beginning. Before your business launches, decide what you can afford to offer as perks for friends and family. You might offer an exclusive sale, a ten percent discount on every purchase, or promotions on Family Fridays. By leading with that offer, you clear up any confusion before it becomes an issue.

If your business has already launched, it's not too late to set limits. Reach out to family and friends individually to say something like, "I can no longer afford to offer free services, but I am so grateful for your business, and I will be offering exclusive family sales instead.' That way, you de-personalize the issue and reinforce your gratitude.

Related: Are You Taking More Than You Give? 3 Tips for More Balanced Relationships

2. Focus on what you are willing to offer. When setting limits, emphasize what you can do for others versus what you can't. By announcing a special deal for family and friends, you make them feel appreciated, no matter how modest it might be.

If anyone is upset that you're not offering enough, just explain why you can't offer more. Put it in terms of the people you need to protect. "Your business supports your employees and their families," Sussman says. Framing your choices in terms of your obligations helps others understand them.

3. Discuss problems before they blow up. When someone is taking advantage, confront them as soon as possible. "You've got to nip this stuff in the bud before you get too angry," Sussman says. "You want to take the high road." Tell them how you feel and how their actions are affecting your business, then reinforce what you are willing to offer.

To ensure a constructive conversation, choose a time when you can talk privately, plan what you're going to say, and keep your tone positive. "No one can take advantage if you don't let them," Sussman says.

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