A couple who opens a business together likely hopes that the business will continue to operate successfully as long as they’re alive. Spouses often work hard and put a lot of energy and money into growing small businesses so that they can support their families. But, what happens to a business if a couple that co-owns it decides to divorce?
The answer to that question isn’t always easy to determine. These businesses may continue to operate normally despite the split. Some may be sold, shut down or bought out by one spouse. If you’re interested in the first option, these tips may help to protect the business throughout the divorce:
Create a clear separation of roles and responsibilities
Establishing a clear separation of roles and responsibilities is crucial for a couple going through a divorce to continue operating a family business jointly. Each individual should have distinct duties that play to their strengths and professional expertise, minimizing overlap and reducing the potential for conflict.
Develop a formal agreement outlining business operations
A formal agreement that outlines how the business will operate during and after the divorce is essential. This agreement should cover financial arrangements, decision-making processes and conflict-resolution methods. It’s best to have this agreement as detailed as possible to avoid potential conflicts in the future.
Prioritize communication and professionalism
Effective communication and a commitment to professionalism are key to successfully co-managing a family business after a divorce. A former couple should establish regular business meetings with agendas focused solely on business matters. Using business management tools or platforms for communication can help maintain a professional tone and keep records of decisions made.
Implement mechanisms for dispute resolution
Despite the best efforts, disputes may arise. Implementing predefined mechanisms for dispute resolution can help manage these conflicts constructively. Options may include mediation, arbitration or consulting with a mutually agreed-upon business advisor.
A family business is only one factor that has to be considered during a divorce. Anyone going through this process should remember to think logically about the decisions they have to make. Working with a legal representative who can help them to remain focused on securing a fair property division settlement that makes sense for their business and personal needs can be beneficial.
