Over the next few years, there will be a lot of baby boomers—people born between 1946 and 1964—exiting the work force due to retirement. On average, 10,000 baby boomers retire every day, and this is the first year in which they are outnumbered in the work force by millennials.
According to the U.S. Small Business Administration, 50.9 percent of small business owners are between the ages of 50 and 88. That means over half of current small business owners will probably retire within the next 15 years.
What will happen to their businesses when they retire? What will it mean for their employees, partners, and customers?
Small business owners, including manufacturers, are often involved in each and every aspect of their business operations. They handle many of the day-to-day tasks themselves, and also deal with the customers and suppliers. Without sharing this knowledge, it may be difficult for the business to run smoothly after they retire.
If you are approaching retirement and haven’t thought about your future plans, here are a few options to consider:
Your first option is offering to sell your company to your employees. This would ensure that your company will live on and your employees will be taken care of. If you choose this option, you need to think about succession planning. You will need to transfer your knowledge, insight, and skills and agree on the terms of the sale. Some common options are a lump sum or payout over time. You will also need to think about leadership going forward. Do you have capable employees, or are you going to try and stay on as a partner? To successfully implement a succession plan, you need to put the structure in place now.
Another option is to sell your company to a competitor or customer. If you go down this route, you will need to think about timelines as well as who will handle the business transfer. Customer notification and employee transition are also concerns that will have to be addressed. If you have patents or proprietary items, these could be included in the terms of the sale or sold to a third party.
A final option would be to close shop and auction or sell off all your assets. However, you may have faithful employees who have been with you for years. What will happen to them?
It took a lot of hard work to start your company and turn it into what it is today, and it will be difficult to leave it behind when you retire. By starting to outline an exit plan and by preparing both your employees and customers for your retirement, you can ensure that the process will go smoother than if you wait.
This is your life’s work. Making sure it is protected and set up for future success isn’t something that should be put off for another day.