The repercussions of divorce for small business owners
No matter who you are or what your circumstances are, divorce is never an enjoyable experience. But there’s a good case to suggest that a divorce is even more troublesome for small business owners.
The modern business world is a very exciting place for small company owners, sole traders and the huge volume of freelancers. The opportunities and chance of business success and longevity are greater than ever before, but unfortunately, issues in your personal life — such as divorce — can cause serious repercussions for your company.
In this post, we’ll take a look at a few of the different ways a divorce can have an impact on a small business, and what company owners can do to make sure they can maintain a successful business heading into the future.
The financial impact of a divorce settlement
Maintaining an orderly and consistent income is essential for all business owners. It may take a little while before you begin to make a profit, but once you do, you’ll reap the rewards of being your own boss. It’s for this reason that paying out for a divorce settlement and the necessary divorce solicitor fees can have such a severe impact on your company.
Less money hampers your ability to pay for things that are vital to the success of your business, whether it’s on a day-to-day or long-term basis. There’s a good chance this will at least slow your company’s progress a little, but the worst case scenario could see your business closing or forcing you to sell up. It’s for this reason that you should seek legal council to advise you about the financial aspects of your business during a divorce.
Your spouse may be entitled to more than you think
This isn’t so much a repercussion, but something you will want to be aware of. If you established your business while married, your spouse might have a case that they contributed to the success of your company and are therefore entitled to be compensated accordingly. In this situation, your business could take a serious financial hit, as well as cause further issues if your spouse had helped to fund the business at any stage.
A postnuptial agreement (or prenup if the business was established before marriage) will help to determine that you both get what is rightfully yours and prepare you for the potential divorce process and working with divorce solicitors. Thus, it protects yourself and your business from any nasty surprises.
It will distract you significantly
The life of a small business owner can be hectic especially, during your company’s infancy. You’ll find that free time can often be something of a rarity and your personal life may take a back seat, which is often what causes marriages to break down in the first place. With a jam-packed work schedule, distractions are something that one can ill afford.
Unfortunately, when it comes to a divorce, distractions are something you can expect in abundance. Whether it’s sorting out paperwork and finances, adjusting to a new living arrangement, or being too stressed to focus on your daily tasks, the distraction of divorce can severely hinder your ability to think clearly and work efficiently.
A divorce is a massive emotional strain
When you think of how a divorce affects business owners, you tend to think of aspects such as finance and ability to sustain the company. But it’s the emotional strain and stress that can be the factors which prove to be costly to you and your business. In the short term, it could affect the day-to-day running of operations, but it could also leave you with minimal motivation or interest in your company going onward.
If your emotional state of mind isn’t great or you find that you’re struggling with the responsibilities of running a business one minute and talking with divorce solicitors the next, delegating will prove to be an effective way of relieving pressure. By doing so, you not only give yourself the best chance of a less stressful divorce, but it also provides you with an excellent opportunity to show faith in your employees with additional responsibility.
Clayton Miller is a family lawyer and the lead partner of KMJ Solicitors. His firm provides legal advice on all matters relating to family law — from divorces and separations, to childcare arrangements and prenuptial agreements.
