No business owner can work forever. Even the best of them have to retire and leave at some point. To whom do they entrust their businesses? Who will take the reins from their very able hands? This is a dilemma for most business owners, which is why they find themselves working until they can no longer rise from their beds. They spend their whole lives protecting their businesses, forgetting to enjoy the family time they’ve missed to be a part of. What use is making a living when you cannot live your life? At some point, you have to let go of your business and let others take care of it.
You have two major options when planning to retire. You can sell your business or leave it to someone you trust and act as a consultant. Either way, you will need to learn to let go of something you’ve poured your life into.
Build an Exit Plan
You have no choice in the matter. You will need to leave your business. For that, work with an exit planner. This is someone who will help you create a transition plan. You are either going to sell it, pass it on to a trusted partner, or give it to your heir. The exit plan should include ways to protect the business, employees, and your family. How are you going to get back your money if you plan to sell it? Or, how are you going to be compensated as the founder but not an active board member anymore?
Coordinate Your Financial Plan
The wealth of a business owner is tied to the business. Business owners rely mostly on their businesses to support their families. Their biggest asset is the business itself. That’s why when the business starts to lose money, they scramble for ways to help it stand on its feet. Do you know that two-thirds of business owners do not have a financial plan after retirement? This means they did not invest what they earned from the business, so many of them are forced to sell it when they need to retire. Consult with a financial planner on how you can prepare for retirement way ahead of time. Don’t do it the year before your planned retirement. Do it as early as now.
Consider an Insurance Coverage
There is insurance for everything. There is even insurance for Jennifer Lopez’s buttocks, so why shouldn’t there be an insurance policy that will protect your business and your personal finances when you retire? Talk to an insurance agent to find the best products and policies for you. Make sure to give them an insight into your business contracts and agreements, so they can advise you on your next steps.
Set up a Buy-sell Agreement
Business owners are worried about the future and protection of their families. What will happen to their families if they suddenly die and leave the business in shambles? One of the ways to protect them is to have a buy-sell agreement with your business partners. The agreement will set a predetermined price for the shares. In case something happens to you, the business will buy out your shares based on that price. This will protect your family from great financial losses. However, the price point will not change regardless of how big the business has become in the future.
Prepare a Succession Plan
Who will take over the business when you retire? If you are not going to sell it, then you need to choose someone who is capable to run it. If you retire suddenly (because of an illness, for example), finding someone to succeed you will be a problem. It’s even a bigger problem if something happens to you and the task of finding a successor lands on your family. It’s not only going to be a management problem but a financial one, too. Many families rely on the business to support their needs. If your family is like this, they may find themselves in troubled waters without a formal succession plan.
It is not easy for business owners to let go of something they’ve worked hard for too long. However, when the time comes, don’t you want to be ready for the transition? Don’t you want your business to prosper and flourish despite your retirement from it? Vision and forecast are two of the most important things in business. Your ability to see to the future and envision the survival of your business will keep your business afloat despite the toughest of times.