You’ve built your business from a fledgling start-up to a soaring success. You’ve worked hard, over many years, and now it’s time to sit back and enjoy the fruits of your labors: retirement.
But are you ready for it? The answer to that question may lie in the advance preparation you’ve accomplished for yourself and your successors.
Preparing your children
To prepare your children to take over the helm at your retirement, it pays to begin early. During their school-age years, your children should occasionally accompany you on the job and watch you work. Answer any questions that come up, and explain why you handle specific situations the way you do.
At home, discuss problems and opportunities with your business, and your process for dealing with these as they arise. Let your children know the outcomes of your decisions – successes as well as failures.
Give them summer jobs with meaningful tasks, and explain how their roles fit into the overall goals of the organization. Let them sit in on meetings and accompany you to trade shows or on business trips when practical.
Once your children’s schooling is complete, if they want to join your organization, welcome them. But don’t insist on it.
Giving them the opportunity to pursue other interests and employment can only help strengthen their skills should they later decide to work for the family business. If they do come to work for you, let them know their employment is a privilege, not a birthright, and that they will be bound by the same standards you expect from all of your employees. Make sure they get the training they need, but allow them to grow in their own way and learn from their own mistakes.
Identify the appropriate leadership team, and where possible, a specific leader. While shared leadership can work in some organizations, for others it creates business schizophrenia. Keep in mind that sibling conflicts tend to play themselves out in an organization, especially if a clear hierarchy has not been established.
One of the most important steps to take in preparing for retirement is to create financial independence outside the family business. This will help you avoid the temptation to meddle once you’ve retired.
Well before you’re ready to retire, set a retirement date based on your own needs, your successor’s abilities and your company’s growth stage. Announce this date and put it in writing, letting your employees, family members, clients and vendors know when you expect to retire and who will be taking over the helm when you do.
Without a concrete succession plan, your employees are left feeling vulnerable: Their future depends on the continuation of the company. By establishing a specific date, you won’t be tempted to continue postponing your retirement indefinitely. Once the prescribed date arrives, it’s time to go.
In the book, The Hero’s Farewell: What Happens When CEOs Retire, author Jeffrey Sonnenfeld classified CEOs into four departure styles.
- 1. Monarchs don’t leave office until they are forced out through death or internal revolt.
- 2. Generals are forced out but come back at the first opportunity to “save” the business.
- 3. Ambassadors leave gracefully and serve as post-retirement mentors (without sabotaging their successors).
- 4. Governors rule for a limited term, retire and move on to other business ventures.
To determine which departure style you will adopt, ask yourself the following questions:
- Do I feel the need to be in constant contact with the business?
- What will my reaction be if my successor decides to change the way things are run?
- What will I do the first time the company loses a favorite client?
- What will I do if current management comes to me to resolve disputes?
- What are my concrete plans for retirement?
How you answer these questions will go a long way toward telling you whether you’re psychologically prepared for retirement. It’s natural to have feelings of sadness in leaving a business you’ve built, but when it’s time to release the helm, you owe it to yourself, your family and your business to do so gracefully.