Hardly anyone creates a business while imagining the worst thing that can happen to them. Instead, we envision success, milestones, and revenue generation for the company and for your family.
But unfortunately, it does not always go that way. Companies, even those that really succeed, are likely to suffer losses – not a lack of sales or profits – but of the three D’s: debt, divorce and death.
Let’s move on to each of these topics and find out what are the simple precautions (such as preparation and prenuptial agreements) that you can take not only to survive these situations, but to thrive in your business and community.
How debt can damage a business
When you start a business, it is reasonable to get into debt right away, but when your debt is so large and so heavy that it affects your daily cash flow, preventing you from going into debt. go out looking for new opportunities, or worse, making yourself unable to pay employees, it may be worth taking a step back for a minute to carefully consider your personal and professional debts.
You may assume that your personal debt has nothing to do with your business, but it can potentially make your business vulnerable if the proper protections are not put in place.
Although it can be hard to imagine, if you are really in the hole, then bankruptcy filing for your business might be the best option for you while you are trying to get your head above the water. The bankruptcy filing will put an automatic stay, which means that your creditors are not allowed to collect from you (and you can make up for some of those payments).
If you file a personal bankruptcy, you must register your business as active, but that does not necessarily mean that you must close your business during the proceedings. (If you own a business and apply for personal bankruptcy, the legal consequences will depend on a variety of factors, so it’s best to contact a lawyer if you have questions.)
Although many companies choose to liquidate their business (thus closing the business and distributing assets to creditors), others who have the option to leave their debt can file a bankruptcy in Chapter 11 or in Chapter 13, which will give them an opportunity to find a repayment plan, reorganize and return to work.
The best policy, however, is always to manage a good amount of debt – and be extremely cautious about borrowing money for your business.
How divorce can be detrimental to a business
We never want to imagine that the relationship we have engaged in would ever break down, but it is sometimes the case. It is quite difficult to allocate personal assets during a divorce, but what happens when you have built a business during the period when you were married?
Things can get tough very quickly here. Here’s how to prove your company’s divorce:
Depending on where you live and how you set up the business, your future ex-spouse could be entitled to up to 50% of your business as well as to a business. part of your future business income.
The best way to prevent a clumsy ex-marital business partnership or your business from being sold to raise cash after divorce is to establish ground rules before your relationship becomes difficult. Yes, I am talking about a prenuptial agreement here.
If you have already made the link, a post-marriage agreement is also a good option if you want to define your business as a separate property of your common assets. You could also set up a buy-sell agreement that would give you the option of redeeming them at a predefined price.
How death can be detrimental to a small business
We understand – no one likes to think about what life will be like after our death, but when you own a business, you have to think about what will be the fate of your business once you will be gone. It is important to do so so that it can continue to be profitable for your family and your employees.
The easiest way to run your business efficiently after your death is a bit of estate planning. This is a good idea, not only because your family and your employees will be less stressed by a lack of direction, but also because you can prevent family members from suffering a loss on an extraordinary amount of money. ; taxes.
The first thing to do to plan your estate is to discuss it with your loved ones and then prepare a will with a trusted legal service such as my recommendation, LegalZoom. Read my review and save 10% with the BEST4B referral code. Think about who, if anyone, you want to run your business, and how (if you choose to sell) the process will be done so that you can save your family a lot of agony.
Nobody wants to think of all the not-so-fun scenarios in running a business, but it’s imperative that you address these difficult topics so that you can make sure that you, your family, and your employees are taken care of. charge in the future.