Are You Ready to Retire? Read these 5 Retirement Myths
Plan your retirement or exit strategy as soon as you start a business. This is the main essence of Norm Bates’s article at The Star.com. Bates owns a transition planning company that focuses on small businesses. He outlines misconceptions about retirement and enumerates steps one has to take for a smooth transition from running a business to exiting the business. Selling a business may take a few years and he suggests planning retirement at least 3 years ahead. When you set up your business, consult with family members. Will they take over the business someday? Selling a business may also mean you stay on during the transition period until new management becomes familiar with operations and employees. In some cases, Bates says, “If the seller expects to get the best price, they should be prepared to participate in the financing and have an interest in seeing the new owner succeed.”
Professionals like Norm Bates, owner of Keeping Main Street Open—a transition planning company with a specific focus on small businesses—know retirement creeps up quickly, and that many so-called truths about exiting the workforce are nothing more than myths.
He’s identified five persistent myths that often become the bane of an entrepreneur’s final years in business.
Myth #1: “Retirement is so far away, I’ll plan later.”
“Selling a business can take up to 36 months from the time it’s listed.”
So, whether the transition entails handing the business over to a partner, a family member, or a third party, Bates advises entrepreneurs start planning their exit at the same time they start the business. This isn’t always realistic, so, at a minimum, he advises owners begin the process 2-3 years in advance of their anticipated retirement.
Myth #2: “I’m sure a relative will take over once I’m ready to leave.”
Although it’s not an unlikely scenario, Bates says manyowners wrongly assume a family member will run the company once they’re out of the picture.
Bates advises entrepreneurs to engage relatives as soon as they start planning their business, and continue the discussion on an ongoing basis.
Myth #3: “When I’m ready to sell, someone will be ready to buy.”
Bates says the best way to tackle this issue is approaching negotiations without emotion. “This is a business transaction,” he says, “negotiating is a key part.”
“Award-winning customer service, a long-term lease at reasonable rates, or a unique product could command a higher price,” he says.
Myth #4: “Once I retire, I won’t need to be involved in the business.”
“Most purchase agreements require the vendor stay on for a training period during the transition, and that can run anywhere from a few weeks, up to several months,” says Papke.
“If the seller expects to get the best price, they should be prepared to participate in the financing,” says Bates, “and have an interest in seeing the new owner succeed.” …
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