After all the years of building and operating a successful business, some owners will likely be ready to retire. However, many business owners don't think about what will happen to their companies after they walk away.
Forbes’ recent article, “Eight Factors To Consider Before Retiring From Your Business,” provides us with some advice on what business owners must do to retire successfully. Let’s take a look:
- Plan Ahead. As in anything, a good plan is to prepare, in this case, years in advance. Pinpoint the major areas that could hamper the sale.
- Identify A Successor. Have a detailed succession plan in place. Identifying your successor(s) early in the process will allow you time to gradually place them in their new responsibilities and give them the benefit of your wisdom and experience.
- Make the Business Work For You. If your business would break down the second you step away, you’re working for your business rather than your business working for you. The time to think about your exit strategy, is when you start your business, not when you’re ready to exit.
- Prepare an Exit Plan. Because most owners depend on their businesses for income, a lack of planning could put their main source of income at risk. It’s critical for a business owner to meet with her legal and financial team to decide on the best exit strategy. Learn your options and make an informed—rather than an emotional—decision.
- Keep Working After the Exit. Stay on for a few years through the exit to let your buyer have some time to transition and structure better buyout terms for you, as you help them grow through the transition.
- Create Solid Systems. These systems and processes are needed to provide a smooth transition from one leader to the next. These are things like standard operating procedures (SOPs), key performance indicators (KPIs) for the overall company performance, decision and authority descriptions that say who can make decisions and has authority over specific areas, set responsibilities and a clearly-defined organizational chart. These are crucial in the transition process.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: Forbes (August 27, 2018) “Eight Factors To Consider Before Retiring From Your Business”