You actually want to retire at some point? Really?
As baby boomers get closer to retirement the ideas of retiring start to enter into their mind. But what to do with their businesses? Shut it down? Transfer it to an employee? Sell it to an investor?
This is a time of big decisions, but wait, there are some simple steps to work on a succession and retirement plan. Successful business owners will tell you, the first step is to NOT do it alone. We can also help you dig into the details along with our alliance partners, so you don’t have to go it alone.
Step 1: Does your business run without you?
If you can go away for 2 – 6 months and your business would run without you and grow and be profitable then the answer to this question is yes. Congratulations you are one step closer to your future. If not, this is a critical step for you. Here are some things to think about.
A. What things are you doing that you need to train others to do? Make a list, identify the skills, document the activities and determine who on your team can be trained to do them.
B. Train the team to do the things you are doing. Have them shadow you for the first little while. Then have them take the lead on those activities until they can do them confidently without you.
C. Create measurements and targets for the team so they can report to each other and to you.
D. Develop a senior management team to keep each other accountable and on track, and have them report into you. Develop a prescheduled meeting calendar for reviews and discussion. You run the meetings initially and then hand it to the team.
E. This is the BIG step, start spending less and less time at the office or shop. Attend the Senior Management team meetings to ensure they are on track and mentor the team on issues. Extend the time you are away over as they get better at the new roles.
You are on well on your way now, how exciting!
Step 2: What does the Succession Plan and structure look like?
Sit down with your advisors, coaches and mentors and figure out what structure best suits your retirement model. Some of the common models are below, but there is no right and wrong model. So take the time to review the options and pros and cons of each for YOU.
A. Sell the Business. This model means you get the company valued, find a buyer, either internal team members or a new external buyer, and sell the company. The money creates your retirement fund and you walk away and enjoy other activities in your life. There are variations of this model that pay you over time for company, but ensure if that model is used that your payout is insured and secured so you don’t lose out if the new owners fail to run a successful business.
B. Have someone else run the business for you, creating a ongoing retirement fund for you. With this model you can either have another buy into the company, putting ‘skin’ in the game and then have them to run it, or you hire a general manager/CEO to run it under your guidance. With this plan you need to stay involved (degree may vary) to monitor that the company continues to grow and build revenue, so that it feeds into your retirement. The danger is that the ‘partner’ or general manager doesnot continue to build the business so that it feeds your retirement. Built into this you need exit and partnership agreements for when you want to completely leave the company, with valuation formulas.
C. Close the doors and don’t sell. REALLY? I see many that do this, but why? All that time, energy, and money you put into the business and you just close the doors. This is one option I never suggest you take – you are worth more!
No matter which model you decide on, it is important to get the right advice, put a step by step process in place so no steps are missed, and patiently implement it. Always believe that your business is worth something, but the key is it needs to run without being reliant on you. So if you aren’t there now, creating a business structure that works without is the first steps you need to work on. Be proud of the business you built, after all for many of you it has been built over 10, 20, 30 years! Considering many businesses don’t survive past 5 years you should be proud.
Now I ask the hard question — what will you do? what do you want for retirement? What do you deserve?
Make it happen and ask if you need help!
Cheryl Dyck, MBA, ISP, ITCP, IP3P
Certified Business Coach
Business Edge Coaching Inc / ActionCOACH
Coaching Consulting Training
Canada’s #1 Business Coaching Firm
Twitter: @cheryldyck Skype: Cheryl.dyck