My grandfather was blessed with a long life, wonderful network of clients, great friends and a growing business drilling wells. It sounds like the American dream for a second-generation immigrant from Portugal, but the business that allowed my grandparents to serve the farms surrounding Gilroy, Calif., for years is no more. Instead, the business shuttered soon after his decision to retire and, as a result, their retirement was difficult at times.
It’s a challenge that faces many entrepreneurs of self-built companies. How do you gracefully and lucratively transition a business to a successor or new owner when it’s time to retire?
Whether you’re succession planning with a keystone employee in your firm or just looking ahead to retirement, there are several important steps that cannot be overlooked.
1.) Every employee position needs a continuity plan. As easy as it would be to assume that only the owner or CEO needs transition planning, the truth is that every position has the potential to be vacated — whether by retirement, an employee moving on or an unforeseen life event. The good news is that you probably already have a short term continuity plan for the times when an employee is sick, on vacation or takes a personal day.
Ask yourself: Who covers their desk? What tasks need to be taught to more than one employee? Consider what you would do if a day off turned into a month.
It’s almost easier for the boss to think about what they would do if every other position was vacated, overlooking their own role. I’m not advocating complete abdication of responsibilities, but slowly and over time, you should begin the habit of teaching and training your employees to do many of the things that fall solely in your lap.
2.) Embrace incremental training. Training your team is often done out of necessity the day before vacation or right before someone resigns. Instead, build training into the culture of your company. Otherwise it becomes too easy to imagine retirement as a “some day” event that you can plan for later.
An added benefit of this incremental approach to training is that your company as a whole will strengthen with more coverage of tasks and less over-reliance on a few employees, including yourself.
So many entrepreneurs choose to begin their own business to create freedom only to deny themselves the opportunity to take vacations and time off when needed. This isn’t wasted time, the training content you create becomes a functional asset that increases the overall value of your company if you choose to sell.
3.) Remember that no one is irreplaceable. It’s easy to live in denial and think “this business won’t survive without me!” In fact that’s the last thing you want. Creating a business that grows and thrives without you means your legacy will outlive you for decades.
It’s one of the mistakes that, in hindsight, Grandpa George made when selling his well-drilling business. The new owner had no idea how to drill or run a business, so after purchasing the company and rig he shuttered the company after a single job. The industry connections and reputation that had been built for decades ceased as well, and instead of a retirement buoyed by the residual revenue from a business that became an asset, my grandpa lived modestly on retirement and social security until he died in 2010.
As a business owner, it’s tempting to think that no one could do what you can. But it’s even more frightening to consider that your life’s work, the company you’ve poured your heart and soul into could close entirely.
Ask yourself: How can this business thrive when I’m no longer at the helm? What kind of legacy would I like to leave for my family and community? What steps must I take to ensure my company’s longevity?
Whether or not a sale makes sense, the economic recovery that has fueled the growth of many businesses suggests that it’s a good time for business owners to re-examine the value of their business and to revisit — or put in place — a succession plan which may or may not include the prospect of a sale.
Surviving the Great Recession wasn’t easy for anyone, but it had a unique impact on business owners who were looking forward to retirement. One-third of small biz owners are over the age of 55 – primed to step away from the day-to-day routine. When the economy went into a tailspin, those trying to either sell or otherwise transition the ownership of their business had to keep working, even as the long slump made staying in business a struggle.
Michelle Christison knows what successful family communication looks like when it comes to wealth transfer issues. A potential client approached her with a problem — she had money she didn’t need.
Today, there are more than 8 million women-owned businesses in America, generating nearly $1.3 trillion in annual revenue. Women continue to launch enterprises at a faster rate than the national average, according to the latest Census data. In fact, women have been launching and growing businesses faster than men for the past two decades.