Small businesses are relatively common in the U.S. They take up over 90% of firms in the country, reaching more than 30 million in 2020. However, small companies don’t last very long, with more than half failing by their fifth year and the majority failing by their tenth year. There are various reasons why a small business can come to an end. One reason could be that the company is not generating enough revenue to cover its costs.
Many factors can lead to the lack of revenue, such as the economic climate, competition, or product or service quality. Another reason for a small business failure could be poor management.
Business owners may not have structured the business in a way that allows it to grow, or the owners may not have been effective in marketing or selling their products or services.
A small business can also fail if it cannot compete with larger companies in the same industry. This may be due to a lack of resources, such as capital or manpower, or larger businesses have more name recognition.
However, marriage and divorce can also be why a business might fail, and it’s rarely discussed in the country.
Marriage and Divorce in the United States
In the United States, marriage and divorce are both common occurrences. About 41% of marriages end in divorce, and although this number is decreasing, it’s still one of the highest in the world. While this may be due to several factors, such as infidelity or financial problems, it can also significantly impact a small business. There are many reasons why divorce can affect business.
Partner v. Partner
The first reason is that when two partners start a business, it can be challenging to continue running the business if they get divorced. Each partner may want different things for the company, or they may not be able to work together as effectively as they did before.
The worst-case scenario is if each partner wants the business for themselves and fights for it. This situation can ruin not just the company but the family as well. If the partners can’t agree, it may be necessary to sell the business or dissolve it entirely.
Divorce and Finances
Another reason divorce can affect a small business is the financial implications. Divorces can be costly, and often one spouse will have to pay alimony or child support. Alimony can take away from the money that the business owner would otherwise use to run the business. In addition, property division can also cause financial problems. For example, if the company is considered marital property, it may have to be sold to divide the assets evenly. Again, this would harm the business.
To avoid the cost of divorce, it’s suggested that couples get a divorce mediation service instead. This would allow them to work out their differences without going to court. They won’t even need to pay an expensive lawyer for it. Instead, they can hash out their differences and go on their separate ways.
Divorce and Family businesses
If a small business is part of a family, divorce can also affect it. For example, if one family member gets divorced, they may no longer want to be involved in the business. This can lead to conflict within the family and make it challenging to continue running the business.
In addition, if a couple gets divorced and they have children, they may not be able to see eye-to-eye on how to run the business. This can create even more conflict and make it even harder to keep the business going.
How to Avoid Divorce From Ruining Your Business
The best way to avoid divorce from ruining your business is to have a prenuptial agreement. This document can help protect your business in the event of a divorce. It can stipulate that the company is not considered marital property and will not be affected by the divorce.
Another way to protect your business is to keep it separate from your personal life. You should have different bank accounts and credit cards. You should also keep track of all the expenses related to the business. Doing these things can make it easier to prove that the company is separate from your personal life if you ever get divorced.
If you are already married, it’s essential to communicate with your spouse about the business. You should let them know your goals and how important the company is to you. Communication will help to avoid any conflict in the future.
Divorce is a complicated topic, but it’s essential to be prepared for it. If you have a small business, there are ways to protect it from the adverse effects of divorce. By having a prenuptial agreement or keeping your business separate from your personal life, you can help to avoid any problems in the future.