The Many Faces of Retirement
Some business owners never retire and others phase out their involvement gradually. Still others close their doors the moment they reach a certain age or other milestone. Then there are those who want to make sure the business they have devoted themselves to is left in good hands. The decision to leave your business can be an emotional one, so you should always do what's best for you and your family. Whatever type of retirement you choose, however, there are many issues to consider to protect your financial future and promote the continued success of your business.
Things to Think About
- Ownership transition. This can be the most difficult part of the retirement process. It's tough to decide whether a family member, employee, or outside party would make the best successor, but the decision should be based on who is most qualified to move the business forward. Consider getting legal advice on whether a buy-sell agreement, which sets forth both parties' obligations in the transaction, would be a suitable transition tool for your situation.
- Your future role. It's important to decide what—if any—part you will play in the business's future to avoid stepping on your successor's toes.
- Your family's financial support. The future security of you and your spouse should come first, even if it means selling the business to your child rather than giving it to him or her. Also, in the event of your death, make sure some of your assets can be readily liquidated to pay expenses, especially if the business represents the majority of your net worth.
Succession Suggestions
According to J. Christopher Raulston, senior vice president with Morgan Keegan, a succession plan first and foremost should clearly outline your goals for the remainder of your tenure at the business -- as well as for the time after you're gone.
"The plan should contain a timeline for succession, from the time you pick your successor to the moment you hand over the reins," says Raulston. "When you see retirement on the horizon, make sure your successor receives adequate training so he or she is prepared to take over, and be certain that your employees have had a sufficient amount of time to become comfortable with your successor."
All in the Family?
Some questions to ask your potential family successor before handing over the keys to your business:
- Is taking over your business really what the potential successor wants?
- Is the family member the most qualified individual to assume control of the business?
- If nominating a family member, what will be the effect on your employees' morale?
- What impact will a family successor have on your future?
Would you like a complimentary review of your business succession plan? Call the Regions Morgan Keegan Service Center at (866) 951-9511.
Investment Services are provided by Morgan Keegan & Company, a subsidiary of Regions Financial Corporation and a member NYSE and SIPC. Securities and insurance products offered through Morgan Keegan are not FDIC insured, not bank guaranteed, and may lose value.