You have spent years building your business. You’ve invested time and perhaps not so proverbial blood, sweat and tears to make it a success. Hopefully, it has provided you with a strong sense of satisfaction when you think of the problems you have overcome and the challenges you have met, along with a good living for you and your family.
Now you and your business have reached a point where it’s time to consider and plan for your next phase. At some point, you will want to spend more time with your family, pursue non-business-related activities or develop a new interest.
You can’t just walk out the door and never return – not if you want to see your business continue. As a good business owner, you have always planned for ways to grow and maintain the business. Now it may be time to begin creating a succession or transition plan, a comprehensive plan for transitioning the business to either new management and/or new ownership and prepare for a time when you are not as deeply involved, if at all, in the business’ operations.
ALL, OR NOTHING, OR SOMEWHERE IN BETWEEN
There are many components to succession planning. As an ongoing process, elements may change over time as business conditions and personal situations change. An important element in all of this is you. As the business owner, you have much more flexibility than salaried employees or executives regarding how and when you begin your retirement planning. Whether you are considering a complete transfer of the business or a gradual disengagement, take the necessary time to consider how involved you wish to stay. Some things to consider:
- Are you going to be comfortable taking directions from a nephew or a daughter, an employee or a new outsider?
- Are you going to be able to step back and consistently support them in their new leadership role?
- How long do you really want to remain active in the company and are you willing to set a final transition date?
You may conclude or already know that you want to completely hand off the business to next generation management or new ownership, or you may need to sell your business to fund your retirement income plan. You may be ready to hop on an airplane to see sites you’ve long postponed visiting or take the time to focus energy on perfecting your golf swing or tennis serve. Much of this will depend on how you picture your retirement lifestyle and how you’re planning for your retirement. For instance:
- Would you like to spend more time with your family or spouse?
- What would you like to accomplish over the next 5, 10, or 15 years?
- What personal goals would you set for yourself?
- How much time and how much money would you need to achieve these retirement goals?
None of these questions can or should be answered quickly. Your answers will probably change over time or even day-to-day depending on circumstances. The important thing is to start the conversation with your family, members of your management team, and your financial, tax and legal advisors. The goal should be to formulate a succession and transition plan that allows you to stay involved to the degree you wish or to step away and focus on your hard-earned retirement.
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