Monday, April 15, 2013

Retirement

You have been running your business for years and are starting to get burned out or perhaps you are just looking to open the next chapter in your life.  You have several challenges, the first is how can this happen and secondly what will you do with your new-found freedom.

If you own the business then you will need to find a suitable buyer for your business or a trusted manager that can run the business in your absence.  Both of these ideas come with their own challenges.  If you sell your business, where do you find a qualified buyer and then what are the options for financing or payments?  Do you maintain the risk by financing the deal and can you get enough money for your company to finance your retirement?  Prior to this step you need to determine the amount of money that you will require to finance the lifestyle that you would like.  When you are able to determine the amount of annual income you require in retirement then you can determine if you can achieve that with the sale of your company.  Now reality time - what is your company worth?  At this point you will need to get an independent business appraisal to see if your retirement dreams can become a reality.  Too often owners come up with a value for their company that is not realistic.  It is like determining the price for your house.  You may think that is is worth $5 million but if there are no buyers at that price then it is not really worth that much. You may be able to get a higher price if you choose to finance the deal but if you want to have an outside interest finance the sale then the broker is essential in this step.  You may also need to seek the services of a qualified financial planner to discuss your personal financial needs.  In the event that you have alignment with all of the above then you are ready to move to the next step which is to locate a potential buyer.

There are several sources for buyers of small businesses. The first is a family member or key members of your staff. This is a great option since you will likely have a good transition and if managed well a high likelihood of success.  As the owner you will have to stay involved with the business to assure a successful transition.  One challenge with an employee sale of family transition is that you will likely need to finance the deal since they often will not come to the table with equity and therefore will have challenges in obtaining financing.  As the owner you need to balance your need for an appropriate price with the company ability to finance the sale.  A second option for selling your business is to engage a business broker.  A skilled business broker will assist with the valuation and bring buyers to the table.  Many brokers will also have financing resources and will walk the sale through.  Selling a business is a difficult task and the assistance of a good broker will make the process much easier.  Brokers will charge a healthy fee for their services, but if you are truly interested in selling your business then this is a necessary step.

In the event that you are able to sell your business for  an amount that allows you to achieve financial independence then you will have to figure out what to do with your time. I am the father of four young children and have thought about how busy I would be if I didn't have to work everyday.  Then my wife took the kids away for several days to the beach while I stayed home.  I was able to get so much done - but then the days were long.  I started to realize that being retired might be boring if the kids were not home to occupy my time.  You likely have invested your heart and soul into your business for many years and the thought of walking away from the stress and the daily grind may seem refreshing.  Now you need to really think about your time after your business.  How long will it take for you to miss the victories and enjoying the pursuit of daily business challenges?  If you are at a point where you are ready to get out then here are some thoughts for your consideration:
- Develop some really strong hobbies and become an expert.  I have an uncle that became one of the leading experts in antique tools.  He has since written three books - one on wooden Plow Planes and two on antique levels.  He has been able to supplement his retirement by buying an selling antiques and travels the world in his free time.  
- Spend time with your children and or grandchildren. You will have to assure that your time is welcome. If that is the case then this can be very rewarding.  Become a coach, get involved with scouts,  volunteer at school, et.  If you have the kind of relationship where this is welcome then you can really build a legacy.  Make sure that you know that your participation will be welcome before you make this plan.   If you are more of a bother than a help you may find that you are not able to spend this time as you wish.
- Golf, fish, hunt, etc.  These hobbies will be fun and may be your dream.  Most people that view their retirement on a golf course find out that might get old after months or even weeks.  Every tried putting together a foursome with a group of people that have to work every day?
- Charity and community service groups.  Your business skills can be a great resource to many different groups and they need your help.  This kind of work can be very challenging and rewarding but at the same time very frustrating. Charities can become bureaucratic and political.  If you are up to the challenge then this might be rewarding.
- Speaking of Bureaucratic - you may have political ambitions.  This could range from the local school board to national office.  With some of these commitments being retired will be necessary since they would require a lot of time away from your business.
- Teaching - This could range from Junior Achievement to College level.  As a successful entrepreneur, you have a skill-set than is intriguing and helpful to many groups.  Depending on the level of eduction you may need to further your education in order to qualify for the level of teaching that you are pursuing.
- Angel financing.  Depending on the amount of money that you were able to accumulate you may be able to help budding entrepreneurs chase their dream.  I have a friend that is not retired but took a well timed break from property development and then made very good money providing bridge financing and short term loans.  This kept him involved in businesses and also helped him earn a much higher return on his capital than he could have with traditional savings vehicles.
- Consulting.  If you have successfully navigated the stormy waters of small business ownership then you have a lot to offer other business owners.  Perhaps this could help you fill your time, create an income stream and also provide a lot of value to people who are dealing with the daily struggles that you survived.
- Go back to work.  Many people that sold their business find out that retirement is just too much (or too little) work so they go back to work.  If you signed a non-compete then you have to either let that expire, find a new market or find a new business to pursue.  Perhaps you can engage your broker that helped you sell your previous business and find one that  meets your needs.  Buy entrepreneur magazine or  some other magazine that covers your hobbies and then look for business opportunities.  Maybe golfing every day is a bit much but owning a company that offers a golf product or service and then getting a write-off to golf feeds your passion.

In the even that you are looking to sell your business or prepare your business for sale, contact business mentors and discuss how you can make this happen. If you need a referral to a qualified business broker then we can also assist with that.  Send me an email - I would love to hear from you.


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