Unless a business is just a hobby, and its owner stays on into their late 80’s and even 90’s, eventually there comes a point when it’s time to shift control of the business into the hands of someone else. While there are important financial, tax and legal concerns at issue, these are far from the only considerations. In fact, they may be the easiest matters to deal with. The following gives some simple advice every business owner should remember.
Clearly define your role (if any) with the company after you retire. Too often the company is in the hands of management team, children, or even an acquiring company, and the prior generation’s role is vague at best. This often leaves the company in a cultural transition much longer than is healthy.
Here are the three that work out:
- Advisor (when asked). Make clear to everyone that it is no longer your job to chart the direction of the company. Also, when asked for advice, avoid giving direction. Make it evident that your ideas may not be correct for a current or future situation. Remember that your experience may be somewhat dated.
- A worker (without management responsibilities). This one is risky, and requires the most finesse. Your relationship with former employees must change in order for you to remain a positive influence on the company. You must at every turn be deferent and supportive of the new owner’s direction and their tactical moves. If you can’t do that, leave.
- Gone (period). This is actually more complicated than it sounds, if you want the move to be successful for both yourself and the company. You must make yourself irrelevant first.
- Have your day to day roles and responsibilities clearly defined.
- Determine the measuring parameters of success or failure in your job.
- Determine who can (most effectively) absorb your work. DON’T ASSUME THAT THE NEXT OWNER TAKES YOUR JOB. …and it’s likely that not just one person can handle it all.
- Craft a Pay-for Performance Plan for those that take on your work.