Without a doubt, we look up to entrepreneurs who made it. The exploits of Bill Gates, Jeff Bezos, and Elon Musk elate us like no other. What we fail to realize is for every successful entrepreneur, thousands more have failed. Indeed, life as a business owner is never a walk in the park. Bureau of Labor and Statistics data shows about 20% of small businesses fail in their first year. After that things start to unravel even more. By the second year, 30% of these businesses will call it quits. And after 10 years, only about 30% will remain standing. Most have failed.
It rsquo;s no secret most businessmen sacrifice a lot of their family time to get the business going. Indeed, time management has always been a struggle for entrepreneurs. But something’s got to give. And this, in the long run, affects the family of many business owners. Small wonder why experts say the toughest job of an entrepreneur is to keep their marriage.
But businessman, beware. Divorce as a business owner is a costly choice. It’s one you definitely don’t want — especially if you are just starting your business. If you’re not convinced, take a look at the reasons why divorce is the last thing you need when you’re in business.
Affects Operations
Everyone knows how emotionally and mentally draining divorce can be. And that means taking care of business could be an uphill climb when divorce enters the picture. Your attention would surely be divided, and this prevents you from focusing on work. Before you know it, your inability to focus could take a toll on the day-to-day operations of the business.
For one, your schedule will be disrupted. Can you imagine having to attend court appearances on dates dictated to you? Then you have to deal with correspondence and calls from your attorney. Add the mental stress brought about by the proceeding and you may have little energy left to run your office.
Affects Employees and Clients
Yes the worse part is you could bring all that heat to your work. Not only will you discourage employees when you start barking orders, but you could affect customer relationships damaging the business in the process. Good thing if you’re Bill Gates and the separation is amicable but what if it’s more like Johnny Depp’s divorce.
As much as it may not seem like it on the surface level, divorce will affect business partners and employees. How this would play out would be dependent on whether your partner decides to remain in the business or leave.
If the business is subject to division, then navigating things might be a bit harder. Will you prefer to give shares of stock to your partner to pay them off? What if after you do so, your spouse ends up with a large percentage of the business? This can cause more chaos among other business partners.
Not to mention if your spouse decides to sell the shares. By doing so, the stock value of the business gets affected. As a consequence, business partners will be infuriated.
It’s a different ball game entirely if your spouse was fully involved in the daily business workings. If your partner decides to quit, then the workload increases for other employees. On the other hand, if your wife chooses to stay, you can expect some tension at work. Many employees will not be so comfortable at work knowing you both are divorced. At the same time, you also have to deal with seeing your ex daily.
All these coming together affects the general performance of employees. And in the long run, the business suffers.
Dissolving the Business
In many cases, things don’t get this far. But few instances will resolve in dissolving the business such as if you and your spouse are equal owners of the business. A mutual agreement can be reached for the business to be dissolved. Or if you have to pay a big payout to your partner for their share and you don’t have the funds. This may result in having to dissolve the business.
Another possible cause can be the poor outcome of the business. If employees are performing poorly, then it may result in the eventual dissolution of the business.
In the case of dissolving the business, making the most of a reliable attorney for estate planning is wise. Take note that estate planning during a divorce can get a bit messy if not handled properly. With your attorney, you can come up with brilliant ways how to handle business assets and properties, as well as how to share them depending on the percentage of the business owned by each person.
As you can see, getting a divorce as a business owner can be really costly. It’s, therefore, best avoided, and that means you put family first above all else.