From Divorce Loss to Entrepreneurial Boss: Using Your Setback to Launch Your Next Chapter

Whether you were surprised by divorce, outgrew the relationship, or are escaping a toxic environment, the end of a long-term marriage can feel like losing a job. You may feel rejected, sad, angry, and fearful for your financial future. If you have a job you enjoy, it’s good time to dive into your work as distraction and to rebuild sone of the confidence you may have lost in the divorce process. If you hate your job, are between jobs, or have been out of the workforce for years to raise a family, the prospect of finding a new job while navigating divorce can feel impossible.

Divorce is a great time to consider your own business

If you’ve been considering entrepreneurship as a potential career pivot, divorce can be a great time to make that leap. It might seem initially foolhardy to take on risk and stress at a time when everything else is falling apart, but often it makes for ideal timing for four main reasons.

1. First, you are hitting the reset button on everything, rethinking your housing and other lifestyle decisions. If you’ve been trying to keep a certain lifestyle afloat with big mortgage payments, car payments etc, divorce is a great time to recalibrate. Not only will you save on the obvious costs but as you trim back your lifestyle, the costs of maintaining that lifestyle – lawn services, premium gasoline, etc – also decrease. If you are happy living on less for a while, you might have the cash flow to build your business.
2. Second, given the increase in “grey” or mid-life divorce, the children have often left home. With sports costs, orthodontia, and college tuition behind you, you may find yourself with a big decrease in household expenses, which gives you a chance to give entrepreneurship a start.
3. Many people receive a cash settlement in divorce, particularly if they aren’t working. Try to see a lump sum payments as a severance package and any ongoing maintenance as working notice. If you use divorce money as seed capital for your business, it’s the ultimate in Other People’s Money. In addition to being emotionally satisfying, it’s money you are meant to grow.
4. Finally, when you feel you have less to lose, your appetite for risk tends to grow. When you were living in a comfortable married life, with everything going as expected, starting a new business may have felt like upsetting the apple cart. In divorce, those apples are all over the road, so if you have an idea for branding a new take on cider, go for it!

What Business Ideas Should You Pursue?

In order to succeed in business, you need to find the intersection of your skills, your interest, and what the market wants. It’s relatively easy to find out what you are interested in and if you struggle, a coach can help. I often use the Myers-Briggs Type indicator and career tools with my post-divorce clients to help them identify their skills, talents and work style. If your skills are dated, a coach can help you identify transferable skills that you can bring to the market. To discover what people want, you need to do some market research. Does the business you want to start already exist? Is it successful? IS the market saturated? How will your offering to customers differ? Is there a lot of competition? A simple SWOT (strengths, weaknesses, opportunities, threats) analysis of your idea can help you see any red flags. Doing a search on a site like answerthepublic.com can identify what information and services people are seeking to make sure your business fills a real need.

Five Key Steps Before Launching

When getting ready to launch a business, it’s exciting to focus on packagine and business names and websites, but first you need to do some basic groundwork to make sure the stage you are setting is solid. Here are five key things to think about before launch day.

1. Identify any gaps you need to fill

Once you’ve decided on a path you want to explore, but lack some of the necessary skills, it’s a good time to start to fill those gaps. If you are negotiating your divorce settlement, tell your family attorney your plans and that you need more education to retrain. If you are not currently working, perhaps you can negotiate some financial support until you are able to get some more education. A silver lining of the pandemic is it’s brought a lot of skills training online so you may be able to get what you need from the comfort of your home.

2. Do some research on licencing, legal structure, insurances, and permits.

You want to start a new business correctly with the correct licenses and business structure. Many local business associations and financial institutions are hosting free online seminars to get you started in the right direction and it’s worth sitting in on a few of them to educate yourself. At that point you can talk to a lawyer, accountant and insurance broker to set up your business, get your tax obligations clarified, and buy anyh needed insurance. At this point you’ll likely be choosing a business name so you may want to involve a trademark lawyer as well to make sure your idea is protected.

3. The Business Plan

Do you have to do a business plan? The short answer is yes. It does not have to be long or perfect and it will change as you get started, but you need to have a good sense of where you are going, and how you plan to finance things, if you want to be successful. There are lots of excellent business plan templates online depending on the type of business you are starting. Don’t agonize over this process or let it prevent you from getting things started, but it’s smart to have a plan on paper.

4. Marketing Plan

If marketing is not your speciality, it’s smart to get some marketing help. I’m a fan of bootstrapping a new business, but if you don’t know what you are doing in this area, you may be shouting about your business idea into the wind. A marketing person can help you find your market, position your product or service, and master the avenues to connect with them online or in person. allowing you to make the sale. If you are planning on building a service-based business, a good marketing person can also help you establish your expertise. They are worth their weight in gold.

5. Reinvestment Strategy

In addition to budgeting for your business, you need to budget for your own expenses. How much money do you need to draw from the business each month? If you are receiving some form of financial support from a former spouse, or have money from selling a major asset, such as the matrimonial home, you may have the luxury of reinvesting any profits you make into the business. This will allow you to bring on a new products line, or run some paid advertising, or take on your first assistant, helping your business to grow.

How does divorce impact entrepreneurship?

Now that you have a roadmap for starting your business, you want to make sure there are not any surprises caused by your divorce. Here are three key areas to watch:

1. If you owe your partner spousal support, and were working at the time of separation, you may have an obligation to pay support based on what you were earning. If you quit to start your own business, a judge may impute income for purposes of calculated child or spousal support/alimony. Make sure to talk to your attorney before quitting your job to launch your start-up to find out the implications.

2. If, on the other hand, you are receiving monthly alimony support payments, the amount can sometimes be clawed back if you make over a certain amount. Again, talk to your attorney and your account to see how to structure your business and any salary you draw to maximize your settlement. If you really want to disconnect from your former spouse, you can often take a lump sum payment without string attached, but make sure you understand any legal or tax implications of the settlement you choose.

3. If you are not yet separated, and thinking of launching a business, you may want to hold off or talk to a lawyer about safeguarding your ideas. Depending on where you live, profits of the marriage tend to be split and you don’t want ownership of your billion-dollar idea challenged by a former spouse. Talk to your lawyer before making any moves.
Divorce can be like hitting a reset button on your life and can serve as an ideal time to start a business. With some preparation and discussions with a lawyer, you can take those ideas you’ve been thinking about for years and finally bring them to life.