A lot of things can affect a business profit, and one of them is the relationship of the entrepreneur, as even the best of entrepreneurs can suffer from bad relationships. Why is this so?
When a business is being run, there is usually a great chance that the owner, while chasing profit spends a lot of hours at work, ignoring the fact that a relationship needs to be nurtured. This leaves the marriage begging for life. Before you can utter, 'Jack Robinson', the relationship dies, and divorce happens. It is no longer news that a dysfunctional marriage can affect business profit because the entrepreneur's mental state becomes compromised.
Divorce is a very common scenario, as about forty-five percent of every first marriage leads to divorce. This report was released by the University of Virginia in 2010. You may think that the divorce rate for first marriages is high until you see the one for second marriages.
A major reason why such relationships do not last long is that of lack of communication that was caused by the chasing of profit. Once a marriage ends, sometimes, the business linked to it dies too.
Once you realize that the relationship is ending, it is wise that you try to save the business and its profit, because if the divorce proceeding starts, there is little or nothing that can be done to stop the business from failing or becoming the property of your ex.
It is common to see a lot of young persons, getting married without a prenup. They start a business, and before you know it, twenty years are gone, and they have a business worth ten million dollars. You and your spouse decide to divorce, there is a great chance that your partner will have a stake in that business. If care is not taken, after the relationship is over, and divorce proceeding is done, you may be left with your ex as your business partner. No one wants that. Worse, you may have to sell your business for money, in a bid to share the cash between you and your spouse.
Both scenarios may be better than what you may get because your partner is requesting for sole ownership of the business.
One may think that the last scenario can't apply to them, don't kid yourself.
The founder of FuzziBunz, a cloth-diaper business that was run online, Tereson Dupuy lost her company during the divorce proceeding.
How do you protect your business and its profit from diminishing because of a divorce proceeding?
1. Start by keeping good records, and differentiating your company's finances from that of the family.
This is one thing that you should adhere to, even when your marriage seems good. Since you are not a seer that can tell what the future holds, it is important that you try to divorce-proof your business and its profit in case your relationship with your spouse wanes. Don't try and use home finances to purchase company equipment. Don't.
2. Give yourself a good salary.
If it is noticed that while you were building your company, you starved your family, the attorney can always argue that since a lot of the cash that was meant for the home was invested in the business, your ex deserves a percentage of that company.
Let's say that you were supposed to earn over three hundred thousand dollars yearly, instead, you paid yourself eighty thousand dollars, to allow you to build a business that you will sell during retirement. At retirement, you made plans to use the money gotten from selling the business to live life to the fullest. Once you divorce before then, you will be expected to give your spouse a share of the company's asset.
3. Try and sack your spouse.
Before you head to the court to divorce, it won't be a bad idea to try and ease your spouse out of your business. Some divorce attorneys advise that allowing your spouse to work in your business may help save cost initially, but it can affect your business and its profit later.
The more time your spouse works in your company or the more important the role your spouse occupies there, the larger the asset that accrues to the spouse. The attorney will always state that your spouse was there to build the empire, hence should benefit a lot from it.
4. Try and forfeit other assets.
While the divorce proceeding is ongoing, the total assets of the couple are usually summed up before divided. Do all you can to hold one hundred percent ownership of that your company. To succeed in this, you will have you will have to lose some other assets. It could be your yacht, vehicles, homes and so on.
Never lose a percentage of the firm's ownership if you want the business and its profit to continually exist.
5. Get a fair valuation.
Make use of the professional appointed by a court to make a valuation of the property, while you also make use of another neutral party to run the figures too. Once there is no disparity, you can agree to it. Let the figures be based on the current worth and not projections.
Don't take the word of an expert, get multiple experts to review it to ensure you have a fair valuation.
This is how some lose a large part of their companies because the valuation was based on a projection and not the current revenue.
6. Try to make arrangements to make the payments for a period of time.
One can pay their ex a share of their business over a period of time. This is a very smart move. The payments could be monthly and can be from the cash flow of the business or using a bank loan. Don't try to pay your ex all at once at it can damage your business' cash flow and profit. Reach an agreement with them