Financial and estate planners are saying that many baby-boom small business owners have not planned for succession at their business. Most expect to sell or close them. The impending retirement of thousands of business owners presents an economic challenge for Long Island and the nation because most haven't made plans for what happens after they leave. Studies estimate more than half of all privately held companies are run by baby boomers and 80 percent expect to sell or close them within the next 10 years.
One financial planner quoted in a recent Newsday article, titled "Panel Focuses On Boomer Business Owners' Retirement Plans," says that "Seventy-five percent of companies—and some estimates are higher—don't sell... The owners just close the doors and walk away."
This frequently occurs because business owners fail to prepare a family member or manager to succeed them, and they aren't psychologically ready for retirement, or they haven't considered how they will support themselves in old age.
If you have been a leader who has been prepared for every business contingency, preparing for a successor or sale should not be that difficult to tackle. Think of it as the next phase of your career and that of your enterprise.
Don't put it off!
Start well in advance with an audit and draft a business succession plan. Select that "first mate" who has shown an aptitude, desire, and work ethic to assume your duties and move the business forward.
If you are going to sell, this person may be your first choice to transition out of ownership more on your own terms. If you try to sell to an unknown buyer a week before you want to retire, it may be much more difficult and could cost you some of your profit.
Reference:Newsday (March 19, 2014) "Panel Focuses On Boomer Business Owners' Retirement Plans"