When you started, bought, or inherited your business, it’s unlikely that retirement was at the forefront of your mind. As the years have gone by, you have lived and breathed your work, and may even have sacrificed time with family and friends to nurture the company you’ve built.

Now, though, you could look at the next 10 years and realise it may be time to start thinking about retirement. Retirement doesn’t need to look the same for everyone, but eventually, the day will come when you need to let another person take the wheel.

If all this sounds familiar to you, one thing holds true: you need an exit plan. Without one, business owners run the risk of damaging their company when they transfer the top job to another leader.

Read on to learn the different approaches you could take to developing your business’s exit plan, and how we can help you form a robust strategy for the coming years.

What will your business look like when you’re no longer at the helm? You have the power to decide

It can be a little overwhelming to think about somebody else running the business to which you’ve dedicated so many years.

Fortunately, with enough forward planning, you have the power to decide what happens to your company when you retire.

There are usually three “umbrella” exit plan options for business owners to choose from, under which a range of bespoke solutions can be organised to fit with your desired time frame and circumstances.

These are:

1. Passing the business to the next generation. If you have adult children, grandchildren, or nieces and nephews who work for you already, one or a few of them may be interested in assuming your role when you retire. In this instance, it’s important to have these conversations as early as possible, so you can prepare them to take on the top job far in advance.
2. Selling the business to a consolidator, stakeholder, or investor. Many business owners take this option for two key reasons: the anticipation of a buyout that could help fund your retirement, and the “clean cut” relief of transferring responsibility of the business to another handler.
3. Winding your business up entirely. Liquidating your business assets could be the option you seek, as it could provide plenty of capital that you could use to fund a retirement and pass an inheritance to the next generation.

Ultimately, deciding which option would suit you and your family can be tough. It’s important to begin brainstorming your exit plan as soon as you can, to allow time for you, your team, your family, and any professionals you retain, to make a choice that serves your goals for the future.

Now you’ve established the “what”, it’s time to focus on the “how”

Once you have come to a conclusion about what your business’s future will be, it’s time to begin executing this plan over a number of years.

Indeed, rushing into a sale or transfer of a business can be detrimental both to your financial situation and your stress levels.

If you plan to sell your business, assessing the market and initiating conversations with potential buyers can take years. Passing your company down to the next generation can also consist of many conversations over a long-term time frame; meanwhile, winding up a business involves discussing this move with stakeholders far in advance.

So, even if you only plan to retire in 10 years’ time, now is the moment to begin putting your exit plan in place.

Of course, there is another (albeit unthinkable) eventuality, which is that you could pass away unexpectedly at any time. As a business owner, it is vital to have a written succession plan in place, so that your beneficiaries can continue with your exit plans – a sale, inheritance, or liquidation – even if you’re no longer around.

While your loved ones may never need to use this succession plan, it could be a life-preserving provision for your business that leads seamlessly into your proposed exit plan.

Working with experienced financial planners can help you manage the sale or transfer of a business asset

Formulating an exit plan takes time and money, and you could be tempted to procrastinate over it for longer than necessary – but you don’t have to.

Consulting experienced professionals can help you to cover all bases and protect the asset you’ve been building for years. At iQ Financial, we work closely with entrepreneurs in the run-up to retirement, helping them to position their personal wealth favourably for a sale or transfer of power.

And, after our clients successfully retire, we then remain in close contact, helping them to manage their retirement income – particularly if they’ve had a large injection of capital from a business sale.

Whatever your exit plan may be, we can help you make it a reality. Email us at clients@iqf.ie, or call 353 71 915 5560.

For more insights on developing an exit plan, read our complete business owners’ guide to retirement planning on our website.

Please note

This article is for information only. It does not constitute advice.

It describes financial planning services that iQ Financial can offer to you. Financial planning services are not regulated by the Central Bank of Ireland.

iQ Financial is not a tax adviser and tax advisory services are not regulated by the Central Bank of Ireland.