Usually, business succession does not go well without a plan. Eventually, business succession will happen with or without a plan because we are all mortal. When you think about all the work you put into building and running your business, you owe it to yourself to develop a plan for how you will step away and whether you want to sell the business.
There are many aspects to a business succession plan, and one should have a Plan A, Plan B, and Plan C because life can be unpredictable, and many things are not controllable. A Florida business law attorney can talk to you about how to plan for business succession and the sale of a business and draft the necessary documents.
Not Planning is a Decision Just Like Planning
You might dream of traveling, spending more time on the golf course, or living on a sailboat, but you are unlikely to get out from behind your desk at the company you built without making some decisions and developing a strategy. Many CEOs are so busy dealing with the day-to-day work of running their company that they simply punt the ball a few years down the road.
They might realize that they want to retire in a few years, but without addressing the “how” of doing so, they might not get to retire on their terms. A significant number of people retire at less than ideal times because their health or economic situation forced their hand.
Personal Considerations in Retiring from the Business You Founded
Some people love what they do so much that they want to keep working until they fall over at their desks. Others would rather spend time doing things they have not been able to do as much as they would have liked because they sacrificed years of their lives to the business.
You might want to consider when you will need to retire to be able to still pursue your passions. Age 90 is no time to do a tour in the Peace Corps. If you want to spend time with your grandkids in retirement, you do not want to wait until they are adults to do so.
If you feel torn between your love for your company and having more free time, you might explore the possibility of a “step-down” plan. For example, you might take two or three 30-day vacations or breaks in the first year, then work every other month in the second year, then only check in quarterly in the third year, and cut the tethers at the start of the fourth year. For some industries and people, however, a clean break is the best option.
Financial Issues to Consider When Thing About Selling Your Business
One of the first questions you should ask yourself is how much money you need for retirement and to pursue the lifestyle and activities you want to enjoy after leaving your company. You might already have the money you need, so stepping away should be easier to accomplish on that issue.
You might want to work for another three to five years to zero balance your personal debt and boost your retirement savings. Knowing the amount of money you will need will help determine the selling price for your company and whether you need to include terms like consulting fees for a set number of years after the sale.
Options for Exiting the Business
There are four primary options for business succession:
- Hand the reins over to a family member, usually an adult child, who will keep the business going.
- Sell the business to your employees or a select worker.
- Sell the company to someone outside the business.
- Get everything that you can from the business and then shut it down. When you do not have someone waiting in the wings, and you can get more value from liquidating than from selling, this can be a better option.
Every company is different. You probably have many questions. A Florida estate planning attorney can help you brainstorm and reach a decision about your business succession. For legal help with your business contact our office today.