Dreaming about retirement? If you own a small business or agency, retiring won't be as simple as handing in your resignation letter and driving off into the sunset. You will need a succession plan that directs how your business will move forward without you. This plan defines your business vision, identifies your successor and other key leadership, and outlines the transition process.
Even if you are a decade or more away from retirement, it's never too early to start the planning process. The earlier you consider your goals for your business, the easier it may be to achieve them, whether that's grooming a trusted family member to take over or maximizing your business valuation prior to selling.
A good starting point is addressing some of the following questions:
What is your top priority for your business? For some business owners, their goal is to sell their company at the best possible price and fund a comfortable retirement. Other business owners hope to keep their company under family leadership for years to come. Your answer to this question determines how you will plan your exit and prioritize opportunities like the sale of your business.
Do you want to stay involved with your business after retirement? Perhaps you're ready to pack your suitcase for an around-the-world trip and never check another work email. Or, you may hope to continue a close relationship with your company, serving as an informal consultant on special projects. Consider what involvement, if any, you hope to have and be sure your successor is on the same page with your vision.
Who will lead the company? Maybe there's one family member who has been by your side for years, learning the business from the ground up. Or, perhaps someone from outside your family has been instrumental in your company's growth and has the best personality and skill set to lead your business forward. Carefully consider your goals, your business's long-term needs, and any skill or leadership gaps. If you want a specific family member to take over the company, is this individual ready and willing to step up? Look for a successor who is prepared to build on your success and take your business to new heights.
What is your timeline for retirement? There's more to the transition process than simply passing the baton. As you consider the timeline for your retirement, consider how this timeline will impact your succession goals. For example, if you are three years from retirement, what do you need to do in the next 12 months, 18 months and 24 months to set your business up for success? Depending on your goals, the transition plan may include training your successor, transitioning key clients over to new account managers, and preparing a communication strategy to announce the changes to your employees and customers. Work backward from your target retirement date to identify succession milestones, the resources needed to manage this process, and how best to ensure leadership continuity. Consider how the change in leadership will impact your employees, clients, and the community at large.
When you have built a business from scratch, letting go may not be an easy process. Give yourself sufficient time to consider what's best for you, your family, and the future of your business.
