The Art of Letting Go, Comfortably and Profitably
I often ask business owners when they plan to retire. The most frequent answers are “never”, “I haven’t thought about it” or “I will never retire; I like to work.” Is your answer one of the above?
If it is, it’s a commendable answer. It shows your dedication to your business. And who wouldn’t want to do business with someone so dedicated?
This response, however, is also emotional rather than rational. Many of us baby boomers have worked hard to build our dreams around our businesses. It is part of us. It is difficult to let go. But like it or not, there will come a time when you have to let go. Doesn’t it make sense to plan for that time now, so that you get the best value for your business and the best successor to continue your business?
If you still can’t embrace the idea of succession planning, ask yourself a few questions, and answer them from the perspective of someone 10 to 15 years older. What is the true nature of your business? Will demand for your products and services grow with time or decline due to changes in technology and socio-economic conditions? Can you survive competition from larger, more aggressive companies? What will be the real value of your business if you try to sell it? If you are perceived to be the value, how much is the business worth if you don’t come along with the sale?
Time to Let Go
The answers can be overwhelming. That is why you need to start planning for the future now. Your passion and experience are invaluable for the continuation of your business. You need to infuse another leader with your passions, strengths and goals so that the new leader can tackle future challenges and grow the business you are so proud of.
Steps for Grooming the Next Leader
So, how will you start this new chapter in your life? Here are a few simple suggestions.
- Look for a successor in a timely manner. It could be a family member or a key employee.
- Confirm the individual’s interests and motivations.
- Share your vision for the company five years from now. Is it compatible with your prospective successor’s vision?
- Create a business plan that is in alignment with the new vision.
- Groom your successor. Identify strengths, and focus on areas that need improvement.
- Insist on your successor having a financial stake in your business. Set in place a plan to progressively increase his or her financial stake and reduce yours over the years.
- Plan a retirement date, and be a consultant to your business after that date, if needed.
Steps for Finding a Buyer
What happens if you don’t find a successor?
- Plan on selling your business, but start the process now.
- Look for a financially sound buyer.
- Your competitors may be your best bet because they know the products and services, and they know they can use your customer base to increase their sales and profits. That makes for a great incentive.
- The key is to think of them now as partners. Cultivate friendly relations. Keep doors open for future alliances, and explore the possibilities of these alliances, mergers or partnerships at an appropriate time. Don’t wait until it’s too late.
- Initiate a progressive retirement plan.
Get it in Writing
One word of caution: Don’t plan your succession on a handshake. Find a sound legal consultant and financial advisor. Create a contract, and be clear on mutual expectations and the role each individual will play at different points in time.
A succession plan offers peace of mind now and for the future. It allows you to retire comfortably and to pursue other passions such as fishing, golfing, traveling, and sharing your business expertise with others.
Ravi Kulkarni is a business and personal coach with first-hand experience in developing businesses in both Asia and the United States. He can be reached Email: firstname.lastname@example.org Website: www.coachravi.com