Listen here:

I heard a story about a local gentleman who owned 5 retail stores. All was going well, he had employees and was earning a nice profit. Then the stores closed – why? He passed away without having a successor.

This got me thinking and asking – are small business owners planning for their retirement, succession, or something else?  So I posed the question on LinkedIn to see what small business owners were thinking, some great responses.  See the question and answers here LinkedIn.

If I were to ask you the same question – what would your answer be? You may be thinking – wait! I’m still building my business how can I think about that now! I would say that it will affect not only how you build your business but how you manage it as well.

Let’s take a look at the more common ways to plan:

Sell

If your retirement (or sooner) goal is to sell the business you are going to be more concerned with revenue:debt ratios, the value of the business, etc.  You will need to keep this in mind from the beginning. You will most likely focus on bigger accounts than smaller ones. Your view of your business and your decisions will be based on the impact on the sale. Something to keep in mind with a sale is the buyer will most likely be interested in keeping you on-board for a couple years for a transition. If you are thinking “I’m selling and out of here”, you will have to think again.

Family

Are you planning on handing the reigns of your business to family? Either a child, spouse, cousin, or sibling? You need to consider – how are they going to learn the business? What do they bring with them? Will they just sustain or grow? If they are already part of your business – what else do they need to learn and how long will it take? If they are not in your business yet – how will they be trained and for how long? Now these are probably more questions to answer than you thought. Take a step back, forget that they are family and think through the process. Determine how long will it take them to learn each job (or at least enough to supervise it), who is the best person to train them (you or someone else), and for how long should they work next to you. I am assuming that you have already had the conversation about taking over the business. Please do not assume that your kids will want to take over from you. For example – I have no interest in taking over my father’s business (sorry dad).

Bring in a Partner

This is a variation of the family option, however this time you are bringing in someone to the business who brings a lot of expertise with them.  This person most likely will just need to learn the specifics of your business.  The nice thing about this option is, you can keep a percentage of your business (you can do this with family as well) to keep as your “pension”. Once you have someone who is interested and you believe is capable of running your business  – your trusted advisors will step in.  Yes, those are your accountant and attorney – to draw up the papers.

Have fun growing your business and keep your final goal in mind. Leave your comments and questions, we will assist you where we can.