Started to think about retirement more seriously? This article helps you learn how to prepare yourself and your business for passing on the torch to someone else.
Even if entrepreneurs are seen as superheroes with superpowers, there comes a time in their entrepreneurial journey when they need to pass on the torch to someone else and take a step back. In other words, they need to retire.
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But exiting a business that you’ve worked years for and invested a lot of capital in isn’t such an easy and smooth task. You can’t just simply decide that starting tomorrow, someone else will be the CEO of your business, and you’ll be living on an exotic island to spend your retirement. This will be healthy neither for your business nor for your financial future. Thus, it would be best if you started preparing for such a transition early ahead. Years ahead.
So, if you are a business owner yourself, and you started thinking about the time when you’ll have to exit your business and leave it to someone else, here are a few tips that will help you have a smooth and healthy transition.
Think about who will be the next CEO
First things first, when you start to think about passing on the torch of entrepreneurship to someone else, you need to find that suitable successor for your business.
As the CEO and founder of the business, you know your company better than no one else, especially when you’ve poured your blood, sweat, and tears into starting it and making it successful. So, there’s no one better who can determine who is a suitable successor to continue your work with respect and the same devotement.
Now, at the moment when you’ll retire, you’ll probably have two options: to sell your business or to pass it to a person you know and trust, such as a friend, family member, or loved one.
If you are to sell your business, you are in less control over who will take over your business. If you pass on the torch to someone else of your choice, you get to decide who is suitable for the role of the next CEO of your business.
Make sure that you choose someone you trust to run things well when you aren’t around anymore.
Once you decide on a successor, you can’t just simply clean your desk, pack your bags and leave. Or, you can do that if you don’t care about the wellbeing of your business, employees, and the next CEO who will follow you.
Training the next person who will run the business you’ve started is an essential step to make sure that whoever follows you will be capable of keeping your company on the right track.
Now, training the next CEO doesn’t mean that you should completely impose on them your way of running things. Allow your successor to also bring in some of their style of doing things. Otherwise, you may prevent your business from growing once the next CEO takes over the reins.
Make the transition easier for everyone
When you retire, things won’t only change for you and the future CEO. Things will also change for your employees who have worked for you for so long.
Having someone else in charge is a major change for employees, too, especially if the new person has a different way of running the business. So, you also need to consider how the change will affect your team and what you can do to help them get through this transition easier.
For example, one strategy would be to ask the next CEO to start spending some time around and create connections with the people in your business prior to the moment when they will take the reins of your business.
Another strategy is to actually ask your employees how they would think it would be easier for them to get used to the change. Maybe they have some ideas which would help you, your employees, and the next CEO.
Create a personal financial plan
Exiting your business and passing over the CEO chair to someone else isn’t just about leaving everything in order about your business. It’s also about considering your financial future as a retiree. This step is probably the only one on this list that you actually need to take as soon as possible. As in now.
As the business owner of your business, you probably have a pretty significant income that allows you to have a certain lifestyle just as you want it. As a retiree, the income you’ll get might decrease or be an unstable source. So, you should prepare yourself for that moment as well.
As the investment experts from UniSuper Superannuation explain, “Decision you make about planning for your retirement during your working life can shape the kind of lifestyle you have when you’re older.”
Make sure the finances are in order
The finances of your business are just as important as your personal ones. Financial stability is essential for the wellbeing of your business. So, you also need to consider this part before passing on the torch to the next person.
In other words, it would be best if you make sure that at the moment when you’ll be exiting your business, the company has no debt to pay and has good financial health. This will ensure that things will be all right for your business and every person part of it.
Accept that you’ll have to take a step back
It can be really difficult to give up a business you’ve worked hard for almost your entire life. So, you may feel tempted to keep a bit of control over your business for yourself. However, if you really want to have a relaxing and peaceful retirement and you don’t want your interference to affect your business, you will have to accept really passing on the torch to someone else and taking a step back. Although it may seem challenging at first, you’ll get used to the idea of being a retiree.