Do You Want To Exit Your Business And Retire?
Have you started planning yet?
POSTED BY ROGER EDDOWES ON 06/11/2017 @ 8:00AM
As owners, we go through the excitement of forming our business, working hard to build it up, navigating the daily challenges and opportunities, only to risk throwing it all away at the end ...
If you want to retire from your business at some point, you need to start planning now!
copyright: spotmatikphoto / 123rf stock photo
I may be over a decade away from hanging up my calculator, but as my business coach continually reminds me, I need to make sure I'm ready for that big day.
"As with all great business events, the key is to plan well ahead and get the timing right!"
Of course, your plans may change, so why not expect to retire at 55 (incidentally this is the age you may start using your personal pension pot), even though you may actually want to retire at 60?
So what are your options? Here are five that come to mind:
Selling to a competitor or supplier
We often think that a competitor would see cost savings as the motivational factor, here, but maybe they are after your product or workforce? So why not concentrate on building up a highly skilled workforce so that's the attraction?
Handing the business to a family member
In my view, the key here is to ensure the family member has the right skills and commitment. You shouldn't just assume that your son or daughter will want to take the business on.
Most successions work best when the successor has gained experience in different roles and elsewhere. You may have more than one child, and one may be interested and the other not, so why not consider restructuring the share capital into voting and non-voting rights and allocating between those who want to be involved and those who don't?
Management Buy Out
The key here is to give your team time. In today's world, it's not always easy for your team to raise the capital. Consider allowing them to purchase the business over a pre-determined number of years?
In circumstances like this, I would recommend getting a solicitor to draw up an agreement committing them to buying it all by your retirement date and acquiring part of the business each year until then.
Merging with a competitor
This route is often used by solicitors and accountants where two businesses may complement each other, but I would recommend that you do plenty of courting beforehand! You are effectively getting into a marriage and sadly not all marriages last and end up in messy divorces which will only delay your retirement.
To avoid all the stress of the above, why not just stop trading, collect the debts, pay off your creditors and sell any assets?
You may wonder why do this when someone could pay you with a pot of gold? But you may not actually have many buyers if your product is nearing the end of its life and the business needs a significant amount of investment and development.
So do plan ahead and get the timing right.
Are you in a cyclical business? Are your profits rising? Is your workforce growing? And have you set a date for your retirement? Whatever you want to do with your business, you need to make the deal look attractive.
"Would you like to know more?"
If you're thinking of retiring and are wondering what to do with your business in future, do give me a call on 01908 774320 or click here to ping me an email and let's see how I can help you.
Until next time ...
More about Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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