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Blog Strategies That Will Help You Prepare Your Business For Sale

January 14, 2021

Last month, we spent some time talking about strategies that will help prepare your business for sale. This month, we’ll be turning our attention to retirement planning for when your business does sell – a topic that will inevitably come up around the family dinner table as the season of nostalgia descends upon us.

This most wonderful time of the year offers a perfect opportunity to take stock of your progress and revisit your current plan for retirement. It takes time to exit your business, whether that involves grooming a key employee, selling to a third party or shutting the doors. It’s not something that can be achieved overnight.

Retirement can also be a mental game. If you’re tied up in the day-to-day operations, you’ll likely never have a 30,000-foot perspective on the business – including what it will look like without you around. Or what you will do after you retire.

Here are a few additional factors to consider as you have those retirement conversations.

1. Set short-term goals

Retirement is often hard to get your head around, either because it’s too big or too far away. Yet while retirement might be the end game, it’s not the only goal you should consider. Set immediate targets that allow you to plan your approach and measure progress along the way.

In some ways, planning for retirement is like playing a long golf shot. You can’t aim at a target that’s 250 yards away – it’s too far to be useful when setting up your swing. But if you pick an intermediate target and align yourself to that, you can hit your shot and know it’s headed in the right direction towards your target.

2. Re-evaluate your succession plan

This is also the time to re-evaluate your succession plan. If a key employee is taking over, is he or she ready? Do they need additional grooming? Is that employee even the right person? Just because someone’s a good worker doesn’t mean they’ll make a good owner.

Also, what happens if that key employee never steps up? Will you ever feel comfortable stepping out completely? If not, it might be time to pivot to Plan B. Otherwise, you’re likely to keep both feet in the door and will never have time to think about retirement.

3. Prepare for family conversations

If your family is involved in your business, be prepared to discuss what each family member’s respective role now, as well as what that role will be once you leave the business.

You might envision passing the torch to a family member. He or she might have the technical skills, but lacks leadership. Or that family member might not even be interested. Have those conversations in advance, and prepare for the fact they might be difficult ones to have.

If you have multiple children, consider talking to them individually before bringing them together. That allows you to feel out what each of their expectations will be, as well as hedge them if necessary.

If your child has a spouse or partner, you will not be delivering the news to just one person. Try to hedge expectations between your child and their spouse, and give everyone a venue to speak.

Also keep in mind that your spouse has built a life without you around all the time. We’ve all heard the story of a newly retired husband driving his wife nuts. Have clear dialogue with your family in advance about what retirement’s going to look like once you leave the business.

4. Leverage external resources

Lastly, be careful about making permanent decisions around certain times of the year such as the holidays. This family-focused season can be filled with emotion that makes you feel hopeful or despondent. It’s important to step around the emotion of the situation. You should feel the same about your business regardless of which holiday is upon us.

That’s one of the benefits of leveraging outside expertise. Transitioning away from your business can be emotional. A trusted advisor will offer the gift of level-headedness when you need it most.

If you are starting to think about retirement, the advisors at Three60 Wealth & Estate Solutions can help. The team of Calgary-based wealth and estate planners can integrate its vast experience and network to create a customized plan for you, your family and your business.

For a truly different financial planning experience, contact our office online or at 403-640-4414 to schedule an introduction meeting.

Authored by: Wayne De Boer, Wealth & Estate Planner at Three60 Wealth & Estate Solutions Inc.