You started your company from nothing 40 years ago. Retirement is finally drawing close. It’s not as if you’re planning to end your
career tomorrow, but you know the day is coming. You have enough to last you, financially speaking, and you do not want to run this company into old age. You’re almost done.
What planning have you done? Do you know how to transfer ownership of your company to someone else? Have you thought about the impact that transfer is going to have on the company itself? Have you considered your own legacy?
You love this company. You worked hard for four decades. You need to put that same level of care and dedication into succession planning, or it threatens to undo everything you worked for. Below are four tips that can help:
1. Consider all ramifications of the transfer.
Think outside of your own retirement and the company’s future. For example, what tax implications would selling the company have for you personally? Consider everything from money management to possible real estate issues. Work through the process carefully so that you can uncover any potential issues and find solutions. One small mistake or oversight can cause serious problems for you and the next owner.
2. Plan in advance.
Don’t do everything the month before you retire. In all honesty, it’s best to give yourself years to plan, especially if you are just turning the company over to an employee, a business partner or a family member. You can work together and make sure that person is truly ready. Even if you’re just selling the company, finding the best possible buyer takes time. Rushing into the first offer can cause problems.
3. Have open, honest conversations about your plans.
Talk to your employees. Talk to your business partners. Talk to your clients. The more information you get out on the table, the easier it is for everyone to work together. Transparency is important, especially if you do not own the company 100 percent on your own. If you have multiple children and you plan to leave the company to just one of them, these conversations are critical.
4. Consider your own retirement plan carefully.
You can’t go back. Once you turn control over, it’s gone. Are you really ready to retire? Do you need more time? Have you considered insurance, long-term care, your daily budget and everything else? Again, it helps to plan in advance so that you do not rush forward and make mistakes.
Succession planning can become complex, especially for high-value companies with many people involved at the highest levels. Make sure you understand your rights and all of the steps you need to take.