Small business owners usually put a lot of effort into building their companies. Those who build a business with their spouse face unique risks due to the ever-present threat of divorce.
If it becomes evident that a small business owner’s marriage is ending, they need to take the time to determine what they need to do to protect their company. There are several factors to consider if you find yourself in this position.
Divorce can lead to financial instability due to legal fees, asset division and added expenses of maintaining separate households. The increased expenses you’re facing may affect your ability to invest in and grow your business.
Division of assets
If the business is considered a marital asset, it may be subject to division during the divorce process, which could result in the business being sold, a buyout of one spouse’s interest or ongoing shared ownership.
Loss of productivity
The emotional toll of divorce can lead to a lack of focus and productivity for you as a small business owner, potentially affecting the overall success of the business. It may be beneficial for you to lean on experienced managerial staff to handle important business functions as you work out the details of the divorce.
Impact on employees
Employees may be affected by the divorce, especially if both spouses were involved in the business. This can lead to a change in workplace dynamics, morale and possibly the loss of key employees. Providing a stable environment at the company can help to keep employees on staff.
Credit and financing issues
Divorce can negatively impact your credit score, making it more difficult to secure loans or lines of credit for the business. Taking steps to protect your credit score, including paying off marital debts by liquidating some marital assets, may be beneficial to combat this potentially devastating problem.
Going through a divorce can have significant impacts on you as a small business owner, both personally and professionally. Seeking legal guidance and taking steps to protect the company can help the business remain profitable and operational during your divorce.