You are 55 and half years old. You have spent your working life building a business that you love and gives you a great lifestyle, everything you hoped it would be! You are no longer working long hours and can have the occasional holiday! Life is good!
So, is it time to retire?
Winding up your business is just throwing away the years of hard work it took to build it up
What are you going to do with the business?
- Are you just going to wind the business up and let your staff go and sell the assets?
- Or do you want to keep the business with someone else running it to give you a passive income while you go off and do the things that you always said you would?
- Alternatively, you could sell it as a going concern for a multiple of your annual revenue giving you a good size retirement fund!
Winding the business up is probably the quickest way out but why would you just throw away the asset you have spent years building when it could be a good part of your retirement fund? Let us take that one off the table then!
What do you need to think about?
There are a couple of questions you need to be asking yourself a few years in advance of when you plan to retire.
- When do you want to leave the business? Many Business Owners ‘s decide they are going to sell and expect it to happen in a few weeks, but it can take a few years to sell a business. You could sell quicker, but you probably would not realise the full value of the business.
- Who is going to run the business when you have gone? If you want to keep the business someone else needs to run it for you and it will be worth a lot more when you sell if you can demonstrate you are not actively involved as it reduces the investment risk to the buyer.
Now the big question, how do you plan to fill your time for the next 25 years?
What do you want to do in retirement?
No really! A few months of doing nothing will be great but I know I won’t be able to do nothing when I retire, so I hope to be coaching. We will have a couple of big holidays and I will buy the Motor Home I’ve always wanted, more importantly we can just go off travelling and exploring when we feel like it.
What do you want to do with your retirement? What about your dream to move to that cottage in the country? Does your husband or wife agree with your plans? How much money do you need to realise the retirement you want?
Whatever you want to do your business needs to run without you
Aside from deciding who will take over the running of your business you also need to ensure it is in good order.
Firstly, make sure the financial controls are in place as cash flow is the life blood of any business.
Ensure your company is operating efficiently with systems and tools in place to control the day to day operation. Make sure you are not dependant on key individuals, ask yourself “if Stan in the warehouse left would the business collapse?”
From a leadership perspective do you have Performance Indicators in place to allow you to understand how each part of your business is performing on a day-to-day or even hour-by-hour basis. KPIs will help to support the sale of the business by showing that it is fully under control and will be even more important if you are looking for a passive income as KPIs act as an indicator to you that everything is running smoothly under the new leader.
I know it sounds a bit egotistical, but would your team leave if you are gone? People are naturally scared of change and so will be extremely nervous of what it will mean to them. You need to keep your team involved and informed about what the change will look like and how it will impact them, explaining what changes the new owner plans to make or how the company will be merged into the new owners existing business. Fundamentally what the change in ownership means to the company, what it means to them – are their jobs safe?
Start preparing to retire in good time
Whatever you want to do it will probably take time to sort out your business and for most people this is a once in a lifetime activity, so you won’t know what to do. Make sure you get advice from the experts, much of it is available for free and note I said experts, it will probably be more than one person!
- Speak with a Business Broker to understand the value of your company and assist with the sale.
- Get a Business Coach to help you get your business in order
- And identify an Independent Financial Advisor to discuss future investment to fund your retirement.
Now then, where is the motor home brochure……….
