Millions of people across the globe dream of owning their own business. Such dreams come true every day, and small business owners often cite freedom and autonomy as two of the most rewarding parts of owning a business.
Small business owners nearing retirement can look back with pride on the business they built. And as retirement draws closer, a successful exit plan can ensure the business keeps going in the years to come. No two businesses are the same, so an exit plan that works for one firm won’t necessarily work for another. But these are some general strategies that can help small business owners nearing retirement age ensure a successful transition when the time comes for them to call it a career.
Work with a consultant. Consultants have experience in a variety of situations, including the development and implementation of exit plans. Business owners who need help finding a consultant can speak to fellow small business owners in the community or ask their financial advisor for a recommendation.
Decide on your long-term role. Some business owners want to remain involved after retirement, while others want to divest themselves entirely. Business owners must give ample consideration to what they want their long-term role to be. If they want to remain somewhat involved, then developing a new organizational structure, including who will have final say on important decisions, will be necessary.
Pick and share a target date for the transition. A deadline for the transition to new leadership will ensure everyone at the company treats it seriously. Target dates can change, but the establishment of the date can motivate business owners to make the changes necessary to ensure a smooth transition. A target date gives those who will be assuming leadership roles time to reorganize staff so the business continues without missing a beat once the change at the top goes into effect. Target dates also give staff ample time to learn and prepare for new roles they may move into once the new leadership takes over.
Welcome feedback. Soliciting feedback from those who will be affected by the exit plan increases the chances of a more successful transition once the target date arrives. This also gives owners a chance to gauge potential successors’ interest in taking the reins. Some potential successors may prefer to stay in their current roles, and owners should not assume that everyone aspires to be head honcho.
Make the plan known. Once the exit plan has been established and all affected parties have accepted it, business owners can make it known to the rest of the company. This helps everyone prepare for the transition, which should make things go more smoothly for owners’ successors.
About the Author