Small businesses are established every day, but due to the difficulty of maintaining a company, many are forced to close down. While plenty of the reasons for a company’s failure will relate to business, personal problems, such as a divorce, can be equally as catastrophic.
We live in an era in which small businesses, startups and freelancers have become a vital part of the modern business world. Due to the potential for success and ability to make money from your own venture, many people are opting to take on the role of a business owner, rather than remain as an employee.
Although this sounds fantastic and a no-brainer to make money, it’s by no means a given. The responsibilities that come with owning a business are a lot to handle. If you consider how much time and effort is required to own a business, the additional hassle of a personal problem, like a divorce, can have severe repercussions for your company.
In this article, we’ll take a closer look at a few of the ways a divorce can spell the end for a new business.
The Financial Impact of an Expensive Divorce
The finances of a small business or start-up are very fragile, so the sudden change or significant dent in your company’s funds will have serious repercussions. A divorce will undoubtedly change your financial situation due to dividing assets and a change of living arrangements. Divorce solicitors are a valued ally when it comes getting a fair share, but even the best family lawyer would struggle to get you through a divorce without a financial loss.
The various aspects of a divorce, make the end of a marriage a costly affair. For business owners, the expense of divorce can have a severe financial impact on your ability to maintain orderly finances and continue to operate successfully. Such an effect can be difficult to come back from and leave you with no financially viable way of running a company.
Distraction is a Killer for Productivity and Motivation
While the financial aspects of a divorce will likely come to mind first, the distraction of the entire process can be equally as damaging to your company, hampering productivity and motivation. Running a small business isn’t easy and requires plenty of time, effort and resolve to be successful — which will prove to be an impossible task if you have minimal motivation to do so.
An established and successful small business will have employees to take on some of the responsibility while you deal with personal issues. But if it’s the early days of your company and you’re a lone operation, with no-one to pick up the slack while the productivity levels are low, your years of hard work will be undone in a matter of months.
Your Former Spouse Could Be Entitled to a Share of the Company
A divorce is never an easy situation for anyone to go through, but for business owners, it can be particularly tricky, as your spouse may be entitled to more than you think. Even if you established your company before you got married — and therefore assume your spouse has no claim on your company — you’ll be surprised to find that your ex-partner has still contributed to the company in the eyes of the law.
If they gain a share of your business or a percentage of future profits, it can cause you serious problems. This is not only because it will leave you at a financial disadvantage; t it could also hinder your ability to expand going forward. This is where a family lawyer will prove to be a huge asset for the future of your company.
Of course, there is the option of a prenuptial agreement if you are planning to get married and are worried about how it will affect your company. If you are already married, you can arrange a postnuptial agreement with your family lawyer, which could save you a great deal of hassle in the future.
There is a Huge Emotional Strain Involved in Divorce
We’ve already mentioned distraction being a reason why small businesses struggle during this time, but the emotional strain of the entire process can have repercussions during and long after the divorce has been settled. The responsibility and focus a business needs to be successful is tough enough as it is, so if you’re upset or angry, it will instantly become an uphill struggle.
The aftereffect of a divorce may leave you uninterested in your business and reticent to the fact it may be on the road to failure. It’s for this reason that a divorce solicitor is such a vital asset during this period. They will do their utmost to make sure yourself and your company come out of a divorce with the means to go forward, taking care of various tasks and paperwork that you can’t handle.
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