If you see retirement on the horizon, you may already be thinking about how to hand over the reins of your company. A well-designed succession plan is crucial if your small business is to survive after you’re no longer involved with its day-to-day operations.
Often the solution to finding the right successor is choosing someone who is already involved with your company. If you are at the head of a family-owned company, look at the other family members who are already involved with the company. You may need to train the right family member in management and leadership skills before they’re ready to take the reins. Plan ahead, increasing your potential successor’s responsibilities a little at a time, and step away from the company for increasing periods to see how they handle it.
If you’re in a partnership, ask one or more of your partners if they have any interest in buying out your share of the company and taking control. This choice gives you assurance that your company can continue along the direction you’ve already set, and it minimizes any disruption within the business during the changeover period.
Some small business owners think of their companies as a ready-to-go retirement plan. Rather than planning for succession, they expect to sell their company and fund their retirement out of the proceeds. The fluctuations of the marketplace often derail this kind of plan, however, so the sale of your company should be only one element of your well-considered retirement portfolio.
As you get ready to turn your company over to someone else, start earlier rather than later to make the transition as smooth as possible. Seek advice from your accountant, attorney, and estate planner to ensure a thriving future for both your business and yourself in retirement.