By Paul Goodman, MBA, CPA, PFCI
Starting to think about your next phase of life, and what it might feel like to pass on your business to a successor? There are a number of questions you should ask yourself before you broach the subject with the next generation — questions that could help lay the groundwork for a smooth transition. Ask yourself:
- “Am I committed to family succession?” The path will most likely not be easy. It’s not for the fainthearted. There will undoubtedly be many hurdles, challenges and frustrations. A strong commitment is necessary to see you through.
- “Have I chosen a successor and a date to retire?” Dreaming is good. Actual plans are better.
- “Do I believe in life after retirement?” Not everyone is wired to retire. This is often true of entrepreneurs who love the work they do. In any event you need to have a new challenge or interest ahead of you if retirement is going to be a success. If you’re not sure that retirement is for you, consider semi-retirement instead. It’ll provide more income and you can continue to do what you love while adding some free time to relax a bit and enjoy some other activities.
- “Can I delegate decision making and authority?” Are you willing to hand over the reins and allow a new leader to emerge even when that person is making poor or bad decisions? You may not remember how you learned to run a business. I bet you made many mistakes and learned from them. That’s is undoubtedly going to be the case with your successor. And you’ve got to be able to back off and let them make the mistakes.
Remember, if there is a secret to successfully letting go during a succession, it’s first to be running a profitable, financially sound operation. Just think how difficult it will be to transition if you are short on cash. Most likely you are adding to your payroll when you bring the successor on board. Are you financially prepared for the extra expense? Profitability will make the transition much easier.
Paul Goodman, MBA, CPA, PFCI, is the founder of Floral Finance Business Services based in Tulsa, Oklahoma, editor of Floral Finance and author of The Profit-Minded Florist.